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EIDL Borrowers Receive Additional Six-Month Deferment

March 17, 2022 by David Moseman CPA

EIDL Loan deferment

On March 15, 2022, Administrator Isabella Casillas Guzman, head of the U.S. Small Business Administration directed the U.S. Small Business Administration (SBA) to provide additional deferment of principal and interest payments for existing COVID Economic Injury Disaster Loan (EIDL) program borrowers. This will provide a total of 30 months deferment from inception on all approved COVID EIDL loans.

This is the third time in the past 12 months that the SBA has extended the deferment period for the COVID EIDL loans.

The SBA intends this deferment period to provide additional flexibility to small business owners impacted by the pandemic, especially those in hard-hit sectors managing disruption with recent variants, as well as recent supply chain and inflation challenges amid a growing economic recovery.

Read the SBA press release for more information.

 

Filed Under: Not-for-Profit, Pandemic, Small Business

SBA Quadruples Economic Injury Disaster Loan Cap to $2 Million

October 26, 2021 by David Moseman CPA

Words EIDL Loan and Covid-19 and pictures of moneyOn September 9, 2021, the Small Business Administration (SBA) announced major modifications to the COVID-19 Economic Injury Disaster Loans (EIDL) program, including raising the loan cap from $500,000 to $2 million and adding business debt payments to the list of ways businesses can use the loan proceeds. A new regulation was added limiting entities that are part of a single corporate group to receive a combined total of no more than $10 million in COVID-19 EIDL loans. For purposes of this limit, entities are part of a single corporate group if they are majority owned, directly or indirectly, by a common parent. The following key changes were announced. All are effective immediately:
  • Increasing the COVID-19 EIDL cap from $500,000 to $2 million: Loan funds can be used for any normal operating expenses and working capital, including payroll, rent/mortgage, utilities, purchasing equipment, and paying debt incurred at any time (past, present and future).
  • Implementation of a deferred payment period: The SBA will ensure small business owners will not have to begin COVID-19 EIDL repayments until two years after loan origination. Payments are deferred for the first two years (during which interest will accrue), and payments of principal and interest are made over the remaining 28 years. The agency previously had implemented an 18-month deferment period for loans made during 2021.
  • Establishment of a 30-day exclusivity window: To ensure Main Street businesses have additional time to access these funds, the SBA said it is implementing a 30-day exclusivity window of approving and disbursing funds for loans of $500,000 or less. Approval and disbursement of loans over $500,000 will begin after the 30-day period.
  • Expansion of eligible use of funds. COVID EIDL funds will now be eligible to prepay commercial debt and make payments on federal business debt.
  • Simplification of affiliation requirements: To ease the COVID-19 EIDL application process for small businesses, the SBA established more simplified affiliation requirements to mimic those of the $28.6 billion Restaurant Revitalization Fund.
A few other key points to the program have remained the same:
  • The COVID-19 EIDL program, which runs through December 31, offers 30-year loans with fixed interest rates of 3.75% for small businesses, including sole proprietors and independent contractors, and 2.75% for not-for-profits.
  • Collateral is required for all loans greater than $25,000.
  • Loans over $200,000 will require a personal guaranty.

 

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional.  You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.

 

Filed Under: Business Taxes, Pandemic Tagged With: Covid-19 loans, EIDL

Important Information on the Restaurant Revitalization Fund

June 8, 2021 by David Moseman CPA

Important Information on the Restaurant Revitalization Fund

Author: Tammy Maguire, Director of Financial Services, CironeFriedberg, LLP

On March, 11, 2021 the President signed The American Rescue Plan Act which includes a grant program specific to one of the hardest hit industries, restaurants. The Restaurant Revitalization Fund (RRF) is a $28.6B program focused on providing grants to restaurants to provide them with relief related to pandemic-related revenue losses. The Small Business Administration (SBA) has issued sample applications for businesses to start preparing for when applications will be accepted. Timing for when applicants can apply is still to be determined. Click here to see a sample of the application on the SBA website.


When the program opens for applicants, there will be priority in how the funds are awarded. During days 1 – 21, the SBA will only distribute awards to small businesses owned by woman, veterans, or socially and economically disadvantaged individuals. On days 22 through end of the program, the SBA will then distribute remaining funds in the order the application were received until funding runs out.

There will be 3 ways in which applicants can apply for the RRF:

  1. Through a recognized SBA Restaurant Partner
  2. Through SBA directly at restaurants.sba.gov
  3. Via phone 844-279-8898

Businesses will want to consider the following regarding the RRF prior to applying:

  • Funding request must be greater than $1,000.
    1. Funding is limited to $5M per location; not to exceed a total of $10M.
    2. Must have 20 or fewer locations.
  • If an applicant has an outstanding Paycheck Protection Program application, they should withdraw the application.
  • All funds must be used for eligible expenses incurred from February 15, 2020 – March 11, 2023
    1. If a business is unable to use all of the funds by March 11, 2023, they will need to return an unused funds.
    2. On December 31, 2021, the applicant will be required to report through a portal how much of their RRF is used within each eligible category.
    3. Annual reporting will be required until the funds are fully utilized.
  • At the time of application the applicant must make good faith certifications to the following:     
    1. Current economic uncertainty makes this funding request necessary to support the ongoing or anticipated operations of the Applicant.
    2. The Applicant does not have a pending application for and has not received a Shuttered Venue Operator grant from the SBA.

The sample applications noted previously have helped to shed light on the calculation for funding.  There will be three calculations depending on when your business started operations.

Calculation #1 – for businesses in operation (making sales) prior to January 1, 2019.

  1. Gross receipts from 2019 Federal Tax Return.
  2. Subtract 2020 gross receipts as reported or to be reported on the 2020 Federal Tax Return.
    • If using a designated SBA point-of-sale restaurant partner, use the gross receipts from the designated point-of-sale partner.
  3. Subtract aggregate PPP funding received (First and Second Draw). 
    • Amounts repaid on or before May 18, 2020 can be excluded.
  4. If the net result is more than $5M per location reduce to $5M and the aggregate of all affiliates cannot exceed $10M.

Calculation #2 – for businesses in operation (making sales) partially through 2019.  Businesses in this category may choose between calculation #2 or calculation #3 at their discretion.

  1. Calculate annualized 2019 gross receipts:
    • Start with gross receipts on the 2019 Federal Tax return.
    • Determine 2019 monthly average * 12.
  2. Follow steps 2-4 in calculation #1.

Calculation #3 – for businesses that began operations on or between January 1, 2020 and March 10, 2021; and business that have not yet opened for sales but as of March 11, 2021 have incurred eligible expenses.

Step 1. Start with the total amount spent on eligible expenses incurred between February 15, 2021 and March 11, 2021.  Eligible expenses are:

  • Payroll
  • Principal and interest payments on a mortgage – not including prepayment of principal
  • Rent – not including prepayments
  • Business debt service
  • Utilities for services that began prior to March 11, 2021
  • Business maintenance expenses including construction for outdoor seating
  • Supplies including payments for PPE and cleaning supplies
  • Food and beverage – in line with normal business activity
  • Covered supplier cost essential to operations made prior to receipt of Restaurant Relief Funds received
  • Operational expenses – normal business operations necessary and mandatory for business (rent, equipment, supplies, inventory, accounting, training, legal, marketing, insurance, licenses, fees).  Costs outside of the normal day to day company activities would be excluded.

Any past-due expenses are eligible if they were incurred prior to Feb 15, 2020 and ending March 11, 2023.

Step 2. Subtract 2020 and 2021 (through March 11, 2021) gross receipts to be reported on the Federal tax return. 

  • If using a designated SBA point-of-sale restaurant partner, use the gross receipts from the designated point-of-sale partner.

Step 3. Follow steps 3-4 in Calculation #1.

Required Documentation

The SBA will require verification of gross receipts in which the applicant can choose one of the following based on their tax return – or other sources:

  • Business tax returns (IRS Form 1120 or IRS Form 1120-S);
  • IRS Form 1040 Schedule C; IRS Form 1040 Schedule F;
  • For a partnership; IRS Form 1065 (including K-1);
  • Bank statements;
  • Externally or internally prepared financial statements such as Income Statement or Profit and Loss Statements;
  • Point of sale report(s).

For additional information on this topic, read Tammy Maguire’s article, Restaurant Revitalization Fund – Are You Ready?

Click here to receive our monthly newsletter to receive timely updates and important information affecting your business and taxes.

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional.  You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.

Filed Under: Business Taxes, Pandemic

The American Rescue Plan Act – COBRA Subsidy Provision

May 4, 2021 by Teri Pough

The American Rescue Plan Act – COBRA Subsidy Provision

Author: Brian Lowell, Risk Manager, ACBI Insurance

The Latest bill addressing the ongoing economic impact of the COVID-19 Pandemic the American Rescue Plan Act (ARPA) has been signed by President Biden on March 11, 2021. Under this new legislation, there is a provision to provide a 100% Subsidy of premiums for COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986) and similar state continuation of coverage (mini-COBRA) for employer-sponsored group health insurance.

The ARPA subsidies cover the full cost (100% of premiums) of COBRA (or mini-COBRA) for the 6-month period from April 1, 2021 through September 30, 2021 for employees and their qualifying family members.  The qualifier – the employee must have lost or loses group health insurance due to involuntary job loss or involuntary reduction in work hours, defined as Assistance Eligible Individuals (AEIs).

The subsidy does not apply to:

  • Individuals who are eligible for another group health plan or Medicare, OR
  • Individuals whose job loss was voluntary or the result of gross misconduct

If an individual receives a COBRA subsidy and becomes eligible for another plan or Medicare and does not inform the health plan, there is a penalty.

Employer Responsibility

Under the subsidy provision individuals are not allowed to claim the subsidy, resulting in the cost of the COBRA premium having to be paid by the employer for the period of the credit. To offset the expense of paying these premiums, employers with both self-funded and insured plans will apply for a tax credit quarterly through a reduction of Medicare payroll taxes (according to forms and instructions to be provided by federal agencies). It can be advanced and is fully refundable.

Employers should accrue a list of all employees (with their qualifying event date) who have been involuntary terminated, or hours reduced, going back to the timeframes outlined below:

  Benefit  Start Date for Reporting Qualifiers
  Fully Insured Medical  CT – 11/1/2018   Other States Vary based on Mini-COBRA rules 
  (state continuation)
  Self/Level Funded Medical  11/1/2019
  Dental  11/1/2019
  Vision  11/1/2019

If you have a COBRA administrator, send them this list as they should be handling all communication/ notification with anyone who qualifies for the COBRA Subsidy.  The ARPA imposes new COBRA notice requirements on Plan Administrators to provide notification of these new benefits.  Per the legislation, the DOL has until April 10 to issue the new model notice for distribution. 

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional.  You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.

Filed Under: Business Taxes, Pandemic

Employee Retention Credit for 2021

April 19, 2021 by David Moseman CPA

Employee Retention Credit for 2021

Author: Tammy Maguire, Director of Financial Services

Employee Retention Credit for 2021

As the first quarter of 2021 comes to an end, businesses should be considering if they are eligible for the employee retention credit. Eligibility, as well as the credit calculation, is very different for 2021 compared to 2020.

Eligibility for 2021

  • The operation of your trade or business is fully or partially suspended during a calendar quarter due to orders from a government authority to COVID-19; or
  • Gross receipts show a decline of at least 20% for the same quarter in 2019.

If you are a new business, the IRS allows the use of gross receipts for the quarter in which you started business as a reference for any quarter which they do not have 2019 figures because you were not in business yet.

Credit Calculation

  • A 70% credit on qualified wages up to $10,000 per employee per quarter can be claimed by employers.
  • Maximum credit to be claimed per employee is $7,000 and $28,000 for the year.

Eligible Wages

  • Qualified wages will depend on the number of full time employees the business has. Full-time employees for the credit is defined as 30 hours a week or 130 hours a month.
  • If the employer has over 500 full-time employees, qualified wages are defined as wages paid to an employee while the employee was not providing services because of suspension or decline in business (vacation and sick pay are excluded from wages). Essentially, the credit is available only for employees not working.
  • If an employer has less than 500 full-time employees, any wages paid during the period of economic hardship are considered qualified wages (cannot take credit on the same wages for paid family medical leave).
  • When calculating the 500 employee threshold, the employees of all affiliated companies sharing more than 50% common ownership are aggregated.

The credit has been extended to December 31, 2021 and should be evaluated each quarter.

Qualified wages used for the Employee Retention Credit cannot be used in the forgiveness calculation for the Paycheck Protection Program or the Restaurant Relief Fund. Navigating the programs eligible to employers to maximize benefits can be complicated and overwhelming.

If you need assistance or have any questions on the Employee Retention Credit, please call your CironeFriedberg professional.  You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.

Filed Under: Business Taxes, Pandemic

Restaurant Revitalization Fund – Are You Ready?

April 11, 2021 by David Moseman CPA

Restaurant Revitalization Fund – Are You Ready?

Author: Tammy Maguire, Director of Financial Services

On March, 11, 2021, President Biden signed The American Rescue Plan Act which includes a grant program specific to one of the hardest hit industries, restaurants. The Restaurant Revitalization Fund (RRF) is a $28.6B program focused on providing grants to restaurants to provide them with relief related to pandemic-related revenue losses. Eligible entities include: restaurant; food stand; food truck; food cart; caterer; saloon; inn; tavern; bar; lounge; brewpub; tasting room; taproom; licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products; or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink. A restaurant that is publicly-traded or owned by state or local government is not eligible. Each eligible restaurant is required to have less than 20 locations, and each location is eligible for a $5M grant up to a cap of $10M per entity.

Unlike the Paycheck Protection Program (PPP), the RRF will be administered directly by the Small Business Administration (SBA). The SBA is working on technology to launch the program via an online portal directly within their site. The SBA anticipates the site will be available in early April.

Once the program is made available, it will target smaller restaurants first. During the first 21 days the grant is available, applications will be reserved for businesses with $500k or less in gross receipts in 2019 and businesses owned, operated or controlled by women, vets, and socially disadvantage. A business will also have to self-certify in good faith the grant is needed in order to remain in business.

Grant amounts will be based on the business’s reduction in gross receipts (2020 revenue less 2019 revenue). If a business was not in existence for all of 2019, the grant is determined by taking the average monthly sales for 2019 less the average monthly sales for 2020 and annualizing. Once the total grant amount is determined, any amounts received from the PPP in 2020 and 2021 will be deducted to determine the final grant amount.

During the covered period February 15, 2020 through December 31, 2021 (or a date to be determined by the SBA), the grant funds may be used for the following eligible expenses:

  • Payroll
    • Principal and interest payments on a mortgage – not including prepayment of principal
    • Rent – not including prepayments
    • Utilities
    • Maintenance including construction for outdoor seating
    • Supplies including payments for PPE and cleaning supplies
    • Food and beverage – in line with normal business activity
    • Covered supplier cost
    • Operational expenses
    • Paid sick leave and
    • Any other expenses determined to be essential to maintaining the eligible entity

Expenses cannot have also been claimed for PPP. If money is not spent by the end of the covered period, it will then need to be repaid by the end of the covered period.

If you are a Restaurant Owner needing the assistance of an experienced Controller but don’t currently have this resource on your team as you navigate through recovery, we can help. Click here for a Case Study to learn how we worked with a Restaurant client to help them control expenses and improve efficiency.

If you need assistance or have any questions on the information in this article, please call your CironeFriedberg professional. You can reach us by phone at (203) 798-2721 (Bethel), (203) 366-5876 (Shelton), or (203) 359-1100 (Stamford), or email us at info@cironefriedberg.com.

Filed Under: Connecticut Businesses, Pandemic

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