Yesterday the SBA announced that the funding for the PPP loan has been utilized. While some practices learned that they had been approved within this window, unfortunately the vast majority did not. There are currently moves for additional rounds of funding, so we will watch this to see if it continues in another form or fashion.
If you did not apply or were not approved in time, it may be beneficial to check with your lender to ensure your application is complete. This way, in the event additional funding is made available, they will be able to move forward with your application if you decide to do so.
If the PPP loan does not transpire, there are other avenues which will be beneficial - most significantly is the employer retention credit (ERC). It is only applicable if you do not receive PPP funds, so depending upon what the future holds it potentially may be beneficial. This is not a decision you need to make now but can be made when we learn more about the fate of the PPP loan.
Below is a bit more information about ERC-
1. How to Qualify: To qualify your business must show a "significant decline" in gross receipts (meaning your gross receipts must fall below 50% of the gross receipts for the same quarter in 2019). After that you will continue to be eligible for remaining quarters so long as your gross receipts do not exceed 80% of the gross receipts from the same quarter as 2019. (Basically, it will be necessary to compare each quarter of 2019 to the same quarter of 2020 - this is something that can be done in your QBs file or your production software).
2: Amount of Credit: If you qualify then you'll receive a credit equal to 50% of qualified wages, up to $10k in wages (so the credit would equal $5k per employee per calendar year). The monetary value of a credit is based upon your tax rate, so assuming a 40% rate, would be $3000 per employee.
3. Timing: You would receive the credit against social security taxes (paid quarterly on your 941 payroll returns), so it’s not funds you would "receive" the benefit would be in "not paying" money due.
4. Fine Print: Unfortunately, this is only available for employees, owners and owner’s family members are excluded.
5. Other: If you decided to take advantage of this credit in lieu of the PPP loan, it would be beneficial to also apply for the EIDL grant. This would amount to $10k of funds through the SBA to be used for other operating costs. Since it is a grant (as opposed to a loan) it would not have to be repaid.
One benefit of this approach is that your employees can continue to receive unemployment benefits, so you could more closely align rehiring them with your business needs. This also eliminates the need to retain a certain number of employees in May and June to receive the forgiveness feature of the PPP loan.
With this being said, it is an ever-evolving process, so we will keep watching the new developments. I know this is a lot of information so please just let me know if you'd like to discuss.