10 Feb What You Need to Know about The COVID Relief Act in 2021
The COVID 19 pandemic has certainly been a gamechanger. With 2020 now firmly in the rearview mirror, we can turn our addition to 2021 and how the government is continuing to help businesses. In this article, we’ll explore some of the key points made by Steve Denny in his COVID 19 Relief Act Update Special Edition webinar, which can be accessed here.
It is important to note that a range of new laws have been passed. During our webinar, Denny noted that there has never been a better time for businesses looking to find help from the government. In fact, the pandemic has ushered in a highly unique, truly once-in-a-lifetime opportunity for businesses owners and buyers alike to find ways to receive help from the government in a range of different ways.
Denny noted that bankers are busier than ever as new applications continue to roll in. He stated, “This is a once in a lifetime event for getting help from the federal government.” Now is an excellent time to be a business broker or M&A advisor, thanks to the ample opportunities being created by the SBA.The PPP is alive and well. This loan is still providing a sizeable amount of cash to a range of businesses. Denny pointed out that there have been $73 billion PPP loans processed to date, and this number will obviously grow. It is in your best interest to understand the new government options that are now available for your clients.
The Payment Protection Program definitely deserves a second look from anyone that is interested. The program does have new guidelines. In 2021, the PPP is available for first time applicants. The deadline is currently March 31, 2021, or until funds run out. In order to be eligible for a second draw, a business must have exhausted its funds from the original loan. They must also have 300 employees or less and have experienced a 25% drop in gross receipts for any quarter comparison 2020/2019.
Additionally, the maximum loan amount stands at $2 million. Additionally, there are now four new allowable expense categories: covered supplier costs, covered operations expenditures, covered worker protection expenditures and covered property damage expenditures. Denny also noted that there is also a new forgiveness process as well as revised tax consequences.
As Denny points out, the SBA and lending community has delivered 30 years of activity in just 8 months. While the pandemic has obviously been a true shock to the system, it is also true that the government response has been strong. In this fact resides the truth that now is the time to achieve laser like focus on finding ways to use this unprecedented level of funding available to assist your clients as they continue to navigate through the choppy waters of COVID 19.