The American Rescue Plan Act (“ARPA”) was signed into law on March 11, 2021. In addition to changes in the tax credits employers may receive for employee retention, paid sick leave, and emergency family medical leave, the ARPA provides the following:
Additional Stimulus Checks: Individuals will receive stimulus checks of up to $1,400 in addition to the $600 stimulus payments that occurred under the previous COVID-relief pay. Individuals earning $75,000 per year or less will receive a full $1,400 per person check. Couples who earn $150,000 per year or less will also still receive the full $1,400 per person benefit. Individuals who earn $80,000 or couples who earn more than $160,000 per year are not eligible for this additional stimulus payment.
Enhanced Unemployment Benefits: The ARPA extends the additional $300 per week that employees on unemployment may receive through September 6, 2021.
COBRA Subsidy: The ARPA provides a 100% COBRA subsidy for "assistance eligible individuals" during the six-month period of April 1, 2021 through September 30, 2021. Further guidance from the IRS is expected in mid April.
Small Business Administration (SBA) Program for Restaurants/Bars: The ARPA provides $28 Billion for a new SBA program focused on supporting restaurants and eating and drinking establishments and $1.25 Billion for venue operators (i.e., theaters, museums, live performing arts organizations).
Paycheck Protection Program (PPP): Provides an additional $7.25 billion in funding for the PPP and expands PPP eligibility to include additional nonprofits (including certain labor organizations) and digital news services providing local news and public health guidance.
Separately, the PPP Extension Act of 2021 was signed into law, extending the deadline for Paycheck Protection Program applications to May 31, 2021. The Act also gives the SBA an additional 30 days beyond May 31 to process those loans. Note that Monday, May 31, is Memorial Day (the last business day before the application is Friday, May 28). The SBA will then have until June 30 to process and approve applications submitted by the application deadline.
DOCUMENTATION FOR PPP LOAN FORGIVENESS
- Application and Instructions for PPP Loan Forgiveness - Updated 6/16. This application form and instructions include measures to reduce compliance burdens and simplify the process for borrowers, including: options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles; flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after receiving their PPP loan; instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness; borrower-friendly implementation of statutory exemptions from loan forgiveness reduction based on rehiring by June 30; addition of a new exemption from the loan forgiveness reduction for borrowers who have made a good-faith, written offer to rehire workers that was declined.
- “EZ" PPP Loan Forgiveness Application Form and Instructions - The SBA created this simplified, or "EZ" form that applies to the following types of borrowers:
- Borrowers who “did not reduce the salaries or wages of their employees by more than 25%, and did not reduce the number or hours of their employees”
- Borrowers who “experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of their employees by more than 25%”
- Borrowers who are “self-employed and have no employees”
- Payroll Reports for Loan Forgiveness - Engage Manager Portal
- Generating Payroll Reports: Click HERE for instructions for how to generate a report that provides a total of all payroll related items by Employee - payments, deductions, and employer contributions (Engage fees, benefits, and taxes). Instructions on how to run additional reports are also included.
- Letter for your Lender:
- Click HERE for a letter you may provide to your lender from Engage with information on the Interim Final Rules (IFR) issued by the SBA regarding eligibility and required PPP loan documentation.
PPP Loan Forgiveness For Loans of $50,000 or Less
- Click here for the simpler PPP loan forgiveness application for loans of $50,000 or less created by the SBA. Click here for the instructions for the simpler PPP loan forgiveness application for loans of $50,000 or less.
- Click here for the Interim Final Rules for the simpler PPP loan forgiveness process for loans of $50,000 or less.
- PPP Loans and Changes of Ownership - FAQ
- Letter for your Lender:
- Click HERE for a letter you may provide to your lender to clarify that 941s are not required for PPP loan forgiveness.
PPP LOAN/FORGIVENESS TOOLS & RESOURCES
- Loan Forgiveness Calculator Tool - A free resource created by the American Institute of Certified Public Accountants (AICPA) to assist small business owners in automating the loan forgiveness application process for their PPP funding. Business owners, and their accountants, can use the tool to fill out their PPP forgiveness application online, receive an automatic forgiveness eligibility calculation and be provided with all the government-mandated forms needed to submit for lender forgiveness. The tool will produce a finalized loan forgiveness application (Small Business Administration Form 3508 or 3508EZ) that borrowers can provide to their PPP loan lenders.
- PPP Loan Overview Video - 30 minute video for PEO clients summarizing the PPP loan process.
- Paycheck Protection Program Info- Treasury.gov
- SBA Coronavirus Relief Options (PPP, EIDL Loan Advance, SBA Express Bridge Loans, SBA Debt Relief) - SBA website
EMPLOYER TAX CREDITS
Deferral of Employment Tax Deposits and Payments
The IRS provided guidance that states that an employer who applies for a PPP loan may begin deferring its share of Social Security immediately, without penalty, until a decision is made on loan forgiveness by its lender. An employer also will not be required to “elect” to take the deferral over loan forgiveness. See the IRS Q&A linked below.
Information on these programs will continue to be updated as the SBA, IRS, and other federal agencies define their procedures and processes. Your Engage Account Manager will be available to provide general support and direct clients to the appropriate resources based upon the information provided by federal, state, and local agencies. Clients should consult with their tax advisor for further guidance.