As you probably know by now, a new stimulus package was signed into law at the end of 2020. Fortunately, it contains another round of much needed help for auto repair shop owners. The Paycheck Protection Program is open again – and you can apply for this loan whether or not you received one on the first round. Plus, this forgivable loan is no longer taxable income! You don’t have to pay it back and you don’t have to pay taxes on it. This is as close as you get to free money.
1ST DRAW PPP ELIGIBILITY: If you did not receive PPP funds before August of 2020, you are eligible to apply for a First Draw PPP Loan. Applications are being accepted as of January 11, 2021 and until March 31, 2021. Use this application here. You can find more information on first-draw loans, including participating lenders and full terms here: Info for First-Draw-PPP.
2ND DRAW PPP ELIGIBILITY: In order to qualify for another round of PPP funding, your shop must be able to show a 25% decrease in revenue in any one calendar quarter of 2020 as compared to the corresponding quarter in 2019. The easiest way for shop owners to figure this out is to run the sales reports out of your shop management software. If you can show a 25% decrease there, your lender will most likely want to see the financials to go along with it, which should be showing the exact same thing. Use this application here.
For those of you who did receive a first-round PPP loan, you should be through your 24-week period. Some banks are still not accepting forgiveness applications (though some have been), and the new round may further push this back. There is however no big urgency to get this done – you have ten months after your 24-week period to complete your forgiveness application. It is also not required to apply for second PPP loan.
When you are ready to apply for forgiveness, most auto repair shops will be able to use the 3508S (1-page) forgiveness application form. This form is now for shops who received $150,000 or less in PPP funding. If you received more than $150,000, you’ll need to use the 3508 EZ forgiveness application form. Filling out these forms should not take too long – most of the time will be spent getting the paperwork that your lender needs. You can also check out Hunt’s videos as he walks us through the process of filling out the forms:
The EIDL (Economic Injury Disaster Loan) is still accepting applications but is currently on pause. It’s reopening to get money out to businesses that have been really hurt by the pandemic, so the SBA is putting some new constraints on the new EIDL. The first round had two parts to it: a grant portion that would allow business owners to get $1,000 per employee, up to $10,000, and a loan portion for up to $150,000 at 3.75% interest payable over 30 years. The new second round of EIDL is just the loan portion – the grant portion is finished. If you received an EIDL loan already, it is unlikely that you will be eligible for a second one. Click here to apply for the EIDL loan. If you have further questions regarding the EIDL, check out our FAQs page here: https://paarmelis.com/ppp-faqs/#EIDL
The new stimulus package also includes an expanded time frame to be eligible for certain tax credits if employees needed to miss work due to COVID. As of December 31, 2020, you are no longer required to provide paid sick leave for any employees who need to miss work because of COVID (whether they have it, are taking care of someone who has it, or need to stay home because of lack of child care). HOWEVER, you may still voluntarily decide to provide this and receive tax credits until March 31, 2021. Make sure you mark those wages accordingly (create a specific COVID pay code) and you will get that money back, dollar for dollar, in the form of tax credits.
We are here for you. As things continue to change throughout this process, we will be keeping our PPP FAQs page as up-to-date as possible. You can also watch Hunt’s video on the new stimulus bill (keep in mind things are changing quickly, so some of the info may have already changed/been updated) Follow us on Facebook as well for updates, new webinar announcements, etc: www.facebook.com/paarmelis