Timely Updates on Economic Relief Programs
April 12, 2021
Over the past couple of weeks, important updates have been announced for several of the federal COVID-19 economic relief program. These program updates include the following:
Paycheck Protection Program (PPP) Loan Extension
Funds Likely to Run Out Before May 31
On March 23, President Biden signed a Paycheck Protection Program (PPP) extension into law, moving the application deadline from March 31 to May 31. Although the additional 60 days was greatly beneficial to small businesses and not-for-profit organizations, according to the PPP Program Report issued on Monday, April 5, nearly $224 billion of the roughly $284 billion in loan funds has been now been approved. This leaves just over $60 billion in total funds available. It is anticipated that these funds will run out before the May 31 deadline.
For businesses that have not yet applied for a First or Second Draw PPP loan and are eligible to do so, we strongly encourage you to apply as soon as possible. For more information, please visit the SBA website.
Increased Loan Limits for COVID-19 EIDL Program
maximum of $150,000. The SBA recently announced a policy change that significantly increases loan limits up to 24 months of economic injury with a maximum loan amount of $500,000. This week, the SBA began reaching out to inform borrowers that the new increased loan limits for the COVID-19 EIDL program are now in effect and they may be eligible to receive additional loan funds.
As a reminder, SBA announced last month that the due date for the first payment for all loans has been extended until 2022. For COVID-19 EIDL loans made in calendar year 2020, the first payment due date is extended until 24 months from the date of the note, and for loans made in calendar year 2021 the first payment due date is extended until 18 months from the date of the note. Loan interest continues to accrue during the deferment period, and a loan increase will not further extend your first payment due date.
Loans approved prior to April 7, 2021 for less than $500,000 are likely eligible for an increase based on new loan maximum amounts announced March 24, 2021. Businesses that received a loan subject to the previous loan limit can submit a request for an increase at this time. SBA is now reaching out directly to loan borrowers via email to provide more details about how businesses can request an increase. Borrowers should expect to receive emails from @sba.gov or @updates.sba.gov addresses.
If an applicant accepted a loan for less than the full amount originally offered, the applicant will have up to two years after the date of the loan promissory note to request additional funds. Applicants may continue to request additional funds even after the application deadline of December 31, 2021.
COBRA Premium Subsidy Under the American Rescue Plan Act (ARPA)
Under the ARPA, the federal government will pay 100% of COBRA insurance premiums for eligible employees and their covered dependents from April 1, 2021, through September 2021. Eligible individuals include employees who were involuntarily terminated or became COBRA eligible due to a reduction of hours (going back to November 1. 2019). Employers may recoup the premium costs through payroll tax credits or refunds.
To accommodate the need for eligible workers to take advantage of this relief measure, a special 60-day enrollment period began on April 1, 2021.
Please note, these new COBRA rules are complex and impose a number of requirements that require immediate action. Please contact your Employee Benefits advisor for additional guidance.
IRS Credits for COVID-Related Sick-Pay
In addition to updated ERC provisions, IRS credits for COVID-related sick-pay, which were first introduced in the Families First Coronavirus Relief Act (FFCRA), have been extended and changed as a part of the most recent stimulus bill, the American Rescue Plan Act of 2021 (ARPA).
Previously, these wages were mandatory for eighty hours of sick pay per employee through the end of 2020. Subsequently, the employer would then be able to take a payroll tax credit for the wages. In the December stimulus bill, the credit was expanded as a voluntary credit for businesses through the end of March 2021. Under the ARPA, the credit was further expanded through September 30, 2021. In addition, the eighty-hour cap per employee resets as of April 1, 2021. This means that an employer who had an employee that hit the maximum sick pay credit in March 2020 through March of 2021 can get an additional credit for any COVID-related leave that occurs after April 1, 2021 for that employee.
Should you have any questions on how these updates may impact you or your business, please contact your HBE advisor. We will continue to keep you updated on new guidance and developments as more information becomes available.
This communication and any applicable contents pertaining to COVID-19 employer relief provisions is based on our professional judgment given the facts provided to us and the COVID-19 employer relief provisions guidance as of the date of the communication. Subsequent developments changing the facts provided to us, or differences in the final guidance and regulations once they are issued, may affect the advice provided. These effects may be material.