NFIB's Guide to New Federal Lending Options

Date: April 01, 2020

Updates Regarding Federal Lending Options

Paycheck Protection Program (PPP) loan application reopening dates:

  • The application process reopened for first- and second-draw PPP loans at community financial institutions on January 11 and 13
  • Friday, January 15 for first- and second-draw loans at smaller lenders, those with $1 billion or less in assets
  • Tuesday, January 19 for first- and second-draw loans with all participating PPP lenders

Read NFIB’s January 9 overview of the re-opening and links to the PPP application forms here.

The U.S. Small Business Administration (SBA) has indicated that the Economic Injury Disaster Loan (EIDL) Advance Grants application will be available by January 17, 2021. We’ve summarized the details of the EIDL program’s re-opening here.

The long-awaited second COVID-19 recovery package was signed into law December 27, 2020 and includes a second and more targeted round of funding for both PPP and EIDL Advance Grants. The new law also makes several business-friendly tax changes to both programs and extends some of the tax credits from the first recovery package. For more information, see NFIB’s side-by-side comparison of EIDL and PPP, our COVID-19 recovery 2.0 fact sheet, NFIB’s bi-weekly COVID-19 webinars, and our Coronavirus Resources hub.

Congress has passed and President Trump has signed several laws intended to help small businesses with cashflow and liquidity issues caused by COVID-19.

NFIB experts have analyzed the federal lending programs established in response to COVID-19 to discover how our members may benefit from them. The laws contain many provisions that are specifically designed to help small business. The most important include:

SBA Economic Injury Disaster Loan Program

Small businesses, nonprofit organizations of any size, or U.S. agricultural businesses with 500 or fewer employees that have suffered substantial economic injury as a result of the COVID-19 pandemic can apply for an Economic Injury Disaster Loan (EIDL) through December 31, 2021.

The federal COVID-19 recovery package signed into law on December 27, 2020 includes an additional $20 billion for EIDL Advance Grants, reopening the program to new applicants whose businesses have suffered a decrease in gross receipts of 30% and are located in low-income census tracts (similar to the New Markets Tax Credit).

The SBA has indicated that the Economic Injury Disaster Loan (EIDL) Advance Grants application will be available by January 17, 2021. NFIB summarized the details of the EIDL program’s re-opening here.

The latest recovery legislation also allows eligible small businesses to receive additional funding if their first EIDL Advance Grant was under $10,000. Learn more and apply for Economic Injury Disaster Loans through the SBA here.

Paycheck Protection Program

The centerpiece CARES Act program, PPP offers federally guaranteed loans that include forgivable qualifying expenses for all small businesses and self-employed individuals. PPP loans can be totally or partially forgiven for businesses that spend them on qualifying expenses within a specified covered period. December 2020 PPP 2.0 legislation allocated an additional $284 billion in funding to re-open the program through March 31, 2021, or whenever funding runs out.

Businesses are eligible to receive a second forgivable loan if they employ 300 employees or less; have used or will use the full amount of their first PPP; and demonstrate at least a 25% reduction in gross receipts in any quarter in 2020 compared to the same quarter in 2019. Small business owners can also apply for an initial PPP loan.

The December recovery package:

  • Simplifies the forgiveness application for loans under $150,000.
  • Allows borrowers to specify a covered period between 8 and 24 weeks for PPP 2.0 loans.
  • Repeals the requirement of deducting an EIDL Advance Grant from the PPP loan forgiveness amount.
  • Expands eligible expenses to include costs for modified business operations, supplier costs, and costs associated with complying with health and safety guidelines. Payroll, benefits, rent, mortgage interest, and utilities also continue to be qualifying expenses.
  • Makes businesses in the restaurant and hospitality industries eligible to receive loans of 3.5 times average monthly payroll, rather than 2.5 times.

The December 2020 COVID-19 recovery package also updated PPP tax implications, making the program more friendly to struggling small businesses in the following ways:

  • Reverses IRS ruling to allow tax deductions for PPP forgiven expenses and clarifies that PPP loan forgiveness is not taxable income.
  • Clarifies that EIDL Advance Grants are not included in taxable income.
  • Extends FFCRA tax credits through March 31, 2021.
  • Extends the Employee Retention Tax Credit through July 31, 2021 and expands the credit, allowing PPP borrowers to claim the credit retroactively and prospectively.

Read our COVID-19 recovery 2.0 fact sheet and view our bi-weekly webinars for answers to your most common PPP and EIDL program questions.

Application forms are now available: 

SBA Loan Deferment

Small businesses with non-disaster SBA loans can have their loan payments covered for an additional three months as a result of the December 2020 COVID-19 recovery package. SBA has yet to issue guidance for this relief, although details are expected soon. NFIB will provide updates as available.

If you have any questions, please contact NFIB’s Small Business Legal Center at 800-552-NFIB (1-800-552-6342) or email [email protected]. And please visit NFIB’s coronavirus news hub for frequent updates.

Read the Latest Legislative and Implementation Updates on Coronavirus


Related Content: Analysis | Coronavirus

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