Local business owners who missed out on the first round of funding through the Paycheck Protection Program — and those who received funding but have been hit exceptionally hard by the pandemic — have until the end of March to apply for the second round of federal aid.

Congressman Josh Harder on Friday hosted a webinar with a panel of guests including representatives from the U.S. Chamber of Commerce, the U.S. Small Business Administration and local Small Business Development Centers, all of whom provided insight and answered questions for small business owners.

“Our businesses have been through the ringer in the last year and we need to do everything we can to support them,” Harder said. “...I encourage our local business community to take advantage of the programs that are out there to help weather this storm and come out of the pandemic stronger than ever.”

Dawn Golik of SBA, director of the Fresno office which oversees the 15 counties in the Central Valley, said that the PPP has been a lifeline for local small businesses. In Harder’s 10th Congressional District alone, the PPP has so far saved nearly 100,000 jobs with millions of dollars distributed to 7,000 businesses.

The PPP allows employers to apply for loans to keep their employees on payroll specifically during the coronavirus pandemic. Businesses may apply for forgiveness of the loans if they verify that the funds were used to keep employees and make payments, including mortgage interest, rent, and utility payments. A second round of the PPP was opened on Jan. 11 with $284 billion in fresh funding and business owners can apply through March 31, though the sooner the better.

“The good news is that the program has even more favorable terms than it did during the first round,” Golik said. 

Eligibility for first-time PPP applicants who did not receive a loan prior to Aug. 9, 2020, has now expanded to include additional types of entities such as housing cooperatives, destination marketing organizations, certain 501(c)(6) organizations such as Chambers of Commerce and eligible news organizations. These are in addition to the entities which were already eligible, including sole proprietors, independent contractors, self-employed individuals, business entities (e.g., partnerships, corporations, LLCs), non-profits, veterans organizations and tribal businesses. 

Those applying for a first-time PPP loan must have been in business by Feb. 15, 2020. 

Borrowers that previously received a PPP loan can apply for a second draw if they have 300 employees or less and suffered a 25% reduction in gross receipts between comparable quarters in 2019 and 2020. 

Businesses can apply for PPP loan forgiveness through their lender, and per the CARES Act, forgiven PPP loans are not federally taxable income. If borrowers do not apply for forgiveness, payments start 10 months after the last day of the covered period.

For more information on the PPP, like how to find a lender or to apply, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program. 

In addition to the PPP, business owners can also apply for the COVID-10 Economic Injury Disaster Loan, which provides aid to businesses experiencing a temporary loss of revenue due to the pandemic. Qualified small businesses, cooperatives and agricultural enterprises with 500 or fewer employees as well as private non-profits are eligible for this loan.

To apply for EIDL, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/covid-19-economic-injury-disaster-loans.

A new SBA program is also in the works called the Shuttered Venue Operators Grant, though applications are not yet open. Eligible entities for this aid include live venue operators or promoters, theatrical producers, live performing arts organizations and motion picture theater operators, museums, zoos, aquariums and talent representatives. These entities must have been in operation as of Feb 29, 2020, and must not have applied for or received a PPP loan on or after Dec. 27, 2020

“You are not alone right now,” Golik said. 

Vartan Dijhanian from the U.S. Chamber of Commerce reminded viewers of the webinar about the Employee Retention Tax Credit, which experienced some positive changes in the new COVID relief bill. 

The Employee Retention Credit under the CARES Act encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $14,000 in wages per employee paid by an eligible employer whose business has been financially impacted by COVID-19.

“(The tax credit) is a hidden gem in the latest relief bill,” Dijhanian said. “It’s even better because it lowered the eligibility threshold to employers experiencing a 20% loss in receipts.”

The credit provision also raises the cap to 500 employees or fewer and looks at loss in receipts in terms or comparable quarters, rather than years. Those eligible can receive both a PPP loan as well as an Employee Retention Tax Credit.

In order to claim the new Employee Retention Tax Credit, eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns, which will be Form 941 for most employers, beginning with the second quarter. The credit is taken against the employer's share of social security tax but the excess is refundable under normal procedures.

In anticipation of claiming the credit, employers can retain a corresponding amount of the employment taxes that otherwise would have been deposited, including federal income tax withholding, the employees' share of Social Security and Medicare taxes, and the employer's share of Social Security and Medicare taxes for all employees, up to the amount of the credit, without penalty, taking into account any reduction for deposits in anticipation of the paid sick and family leave credit provided in the Families First Coronavirus Response Act.

Eligible employers can also request an advance of the Employee Retention Credit by submitting Form 7200.

For more information, visit https://www.irs.gov/coronavirus/employee-retention-credit. 

Valley Sierra Small Business Development Center Director Katy Winders reminded viewers that their local center can answer any questions they have about loans and applications. The Valley Sierra SBDC serves Stanislaus County and can be reached at 209-422-6416.