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If your business hasn’t yet applied through the Small Business Administration’s (SBA) Paycheck Protection Program, you’ll likely be doing so soon. Here are 6 recommendations on the application process from GJM Partner Bob Bobek. Bob has helped many businesses apply for the program in recent days and recommends you keep these tips in mind:

1. Sit down with a trusted advisor and make sure that the Paycheck Protection Program is right for you. There are other programs that may be a better fit for your business.
2. Use a loan calculator. GJM has created a simple calculator for our clients to plug in their numbers and know for sure which program is best for them. Check with your advisor to see if they have a similar tool or reach out to GJM for assistance.
3. Prepare. Make sure you have support for all items included in your loan application (Last year’s tax return, payroll data, etc.).
4. Maximize your loan draw. Make sure you’re getting the most benefit possible for your business.
5. Talk to your banker to make sure you understand exactly what they need and how they would like to see it. Keep in mind the banks are all trying to figure this out, too. Some banks may ask for items that other banks aren’t asking for. Each has its own application process. Most banks are processing more applications for these PPP loans than the total number of loans they process in a given year. 
6. Follow through. Now that you have your application submitted, start a dialogue. Find out how the loan will be processed, what loan documents will you need to sign and when you can expect to receive funds. Remember, once you receive your funds, the 8-week forgiveness period will begin. Its critical to keep communication open with your bank and your advisors. 

You can access information on the Paycheck Protection Program and many other resources designed to help your business navigate the pandemic in the GJM COVID-19 Resource Center.

Bob Bobek is an assurance partner with over 35 years of public accounting experience who works with privately-owned companies across multiple industries, with a concentration in construction and manufacturing.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

As our country faces the COVID-19 crisis we want to take a moment to bring you up to date on some of the steps Gilmore Jasion Mahler is taking as a result. We would also like to share some information on some resources for businesses, should you need them.

Ohio Governor Mike DeWine has announced a loan program to provide economic assistance to companies due to the slowing down of business in Ohio. It may be available to help your business provide funding for payroll, past due accounts payable and other working capital needs. Typically, such a loan program will have a very low interest rate and up to 30 years repayment schedule. Also, in the unfortunate event that furloughs or layoffs are necessary during these challenging times, impacted employees should qualify for immediate unemployment compensation relief.

Here are some helpful links for businesses seeking information in both Ohio and Michigan.

http://jfs.ohio.gov/ouio/CoronavirusAndUI.stm

https://www.michigan.gov/coronavirus/0,9753,7-406-98178_98179---,00.html

While there has been talk of the IRS possibly moving back the April 15 tax deadline, as of now there is no official word on if that may happen so GJM is currently working under the assumption there is no delay in the tax deadline. We expect to receive further guidance from the US Department of the Treasury this week and will promptly let everyone know.

As we are writing this, our offices remain open, though we have encouraged our staff to work from home if possible for the next three weeks. Should you need to drop off tax documents, GJM offices will be open during our normal business hours for you to do so.

We will continue to monitor COVID-19 developments here in Northwest Ohio and around the nation and share further information with our clients and partners as needed. Please feel free to reach out to your GJM team with any questions or concerns.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting services and provides comprehensive services including assurance, business advisory, tax, risk advisory and healthcare management. The firm's professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

Congress reached a deal on a new $900 billion stimulus package just days before Christmas. The president has now signed it and stimulus checks are on their way to many Americans.

The deal comes as the pandemic surges from coast to coast, and after several months of no additional financial help from the government for struggling Americans and their businesses.

A key component of the law, and very welcome news for businesses, is the word that taxpayers will be allowed to deduct costs covered by their Paycheck Protection Program (PPP) loans. The resolution on PPP loan expenses & tax deductibility will ease some frustrations for businesses in the middle of year-end tax planning.

The stimulus package also provides more funding for a new round of PPP loans, stimulus checks for most Americans, and an extension of federal unemployment benefits, among other provisions.

GJM’s Bob Bobek, CPA co-presented a webinar in partnership with the Employers’ Association’s Bob Bethel, SPHR, SHRM-SCP on December 28. They took a closer look at what’s in the stimulus package and what it means for your family and your business. Bob Bobek also covered the latest guidance from the Small Business Administration (SBA) regarding the forgiveness questionnaire for existing Paycheck Protection loans at or over $2 million.

If you were unable to attend the webinar, you now have access to the recording. You can also access other resources in the GJM COVID-19 Resource Center. 

As always, you're encouraged to reach out to your GJM team with any concerns or questions.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.   

Welcome News for Businesses with PPP Loans

The new stimulus package signed into law in late December brings billions more in aid to American businesses. Among the provisions of the nearly 5700-page law: an extension of the Employee Retention Credit (ERC), which is designed to support businesses that keep employees on payroll during the pandemic. The ERC has been extended through June of 2021 and is now available to businesses with Paycheck Protection Program (PPP) loans.

What is ERC and how does it work?

 The ERC is a refundable payroll tax credit that was included in the CARES Act of 2020 with the intent to keep employees on staff throughout the Covid-19 pandemic. For the period March 12, 2020 through year-end, businesses that met one of two tests could claim a credit of up to $5,000 of wages paid per employee. The eligibility tests were either:

1) At least 50% reduction in gross receipts for any quarter in 2020 as compared to the same quarter in 2019 or

2) Full or partial business closure due to a government shutdown in any quarter in 2020

One major note from the CARES Act: Employers that applied for a forgivable Payroll Protection Program (PPP) loan through the SBA were not eligible for the ERC.

Now let’s fast-forward to the impact of the Consolidated Appropriations Act, 2021. Under Act Section 206, businesses can now receive both forgivable PPP loans and remain eligible for ERC. This appears to be retroactive back to March 2020, but there are some unknowns. Here are some things we do know about changes to the ERC:

• The same wages cannot be used to qualify for both PPP forgiveness and Employee Retention Credits
• If utilizing both the PPP and ERC, employers are supposed to treat wages as qualified for ERC purposes before PPP loan forgiveness

So, what do those employers do who have already filed for PPP round one forgiveness? We will have to keep apprised for guidance on this nuance, as it likely affects many businesses.

Some more welcome news for businesses Under Act Section 207: the ERC is now extended through June 30, 2021. The first eligibility test related to the 2021 credits has been eased to only a 20% reduction in gross receipts. Note, this is still in reference to a quarter-over-quarter comparison to 2019 gross receipts. Employers are now eligible for a credit of up to 70% employee wages rather than the 50% eligibility that remains for 2020 credits, and rather than limiting wages per employee to $10,000 per year, this limit is applied per quarter in 2021.  This equates to a maximum of $14,000 in credits per employee for 2021 as compared to the 2020 cap of $5,000 per employee. 

The last major benefit for 2021 ERC calculations is the increase on allowable company size when determining qualified wages. For 2020, employers with 100 or fewer employees could include all wages paid to employees towards this credit. For 2021, this limit is adjusted to 500 or fewer.  Keep in mind, employers with more than 500 employees may still be eligible for a credit; their definition of qualified wages is just limited.

It is important to acknowledge the impact of both PPP and ERC being made available for businesses. Here’s a very simple example of how a company may benefit from both during 2021:

Company A, a manufacturer, has 60 employees, each earning a $50,000 annual salary. Company A meets the gross receipts test for Q1 & Q2 2021 for ERC and for a second round of PPP funding, receiving in January 2021.

             The ERC calculation should be addressed first, as wages are qualified for this credit prior to PPP forgiveness eligibility.  

Company A’s 2021 ERC would be:

70% x $10,000 qualified wages x 60 employees x 2 eligible quarters = $840,000 ERC

Company A also received PPP round two funding of $605,000. The $1,200,000 wages ($10,000 per employee x 60 employees x 2 quarters) used to calculate the Employee Retention Credits cannot be included in wages paid for Company A’s PPP forgiveness application. This means the ERC may limit PPP forgiveness.

Company A will likely spend over $1.3M in wages over their 24-week PPP forgiveness period, meaning only the wages in excess of $1.2M will be eligible for PPP forgiveness purposes. Since PPP loans must be at least 60% spent on payroll, you may have to pay back a portion of the loan.

Moral of the story: Many businesses who qualify for PPP and ERC can benefit from both, so don’t overlook ERC available to you. Just keep in mind the credits you may receive when filing your 941’s could limit your total PPP forgiveness.

In Summary

Overall, the 2020 and 2021 ERC changes are positive for employers and their employees. Businesses just have to keep in mind the computational changes are only effective for the first half of 2021 and forward. There’s still a lot to learn and interpret as we apply these changes in practice in the coming months. I would encourage you to stay in close contact with your GJM tax advisory team as you make decisions for your business in the days and weeks to come. You can also find further resources in the GJM online Covid-19 Resource Center.

Onward! 

Lauren Webber, CPA, EA is a tax supervisor at Gilmore Jasion Mahler with five years of public accounting experience. Lauren specializes in tax planning and consulting for individuals and businesses in a variety of areas including construction & real estate, and manufacturing & distribution. She has experience with flow-through entities and multi-state taxation, along with a deep understanding of the research & development federal tax credit rules. She is a member of the American Institute of Certified Public Accountants (AICPA).

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

With a flurry of recent developments related to pandemic aid for businesses, as well as the coming change in leadership in our nation’s capital, we think it’s important to provide some perspective, insight and information to help our clients, and all businesses make the decisions they face as the new year gets underway.

$900 Billion Stimulus Package

The Consolidated Appropriations Act of 2021, signed into law in late December brings more relief for businesses. Here is a recap of some important facts:

• Allows tax deductibility of expenses paid with forgiven Paycheck Protection Program (PPP) loan funds, an issue that had been of great concern for businesses
• Establishes that Economic Injury Disaster Loan (EIDL) grants and SBA 7(a) loan payments paid by the SBA are not taxable income
• Ends mandate to provide Emergency Paid Sick Leave (EPSL)
• Continuation of additional payments of unemployment insurance
• Continuation and expansion of PPP:
• Original PPP reopened applications for first time borrowers or borrowers who have returned loans due to lack of guidance
• List of eligible participants expanded to include more nonprofits
• EIDL grants of $10,000 are no longer required to be deducted from the PPP loan forgiveness amount

Second round of PPP loans made available

•  $284 billion, targeting smaller businesses and those more negatively impacted by the pandemic
• Businesses must show a 25% decrease in revenue in one of the four quarters of 2020 as compared to the same quarter in 2019
• Loan dollars can be used to cover more expenses including some operation costs, worker protection and property damage
• Application form is now available and the SBA portal may begin accepting applications as early as Monday, January 11, 2021

PPP Forgiveness:

SBA to issue a new one-page loan forgiveness application for loans under $150,000

Employee Retention Tax Credit

The new stimulus package also extends and expands the Employee Retention Credit (ERC) which is designed to support businesses keeping employees on payroll during the pandemic. The ERC has been extended through June of 2021 and makes it available for PPP loan borrowers.

More Resources

GJM Stimulus Package Webinar Recording (December 28)

GJM Assurance partner Bob Bobek, CPA co-presented a webinar on the new stimulus package on December 28^th in partnership with The Employers’ Association. You can watch the webinar and access the slides in the GJM COVID-19 Resource Center.

GJM Tax Policy Uncertainty Webinar (January 14, 2021)

The transition to the Biden administration and to a democratic majority in the Senate has some feeling uncertain about potential tax increases in the months ahead. The recent unrest at the Capital Building has added to the uneasiness. We are hearing from some clients asking if they should take aggressive measures soon to protect themselves and their businesses from potential tax increases on the way. GJM Tax Partner Charlie Heid, CPA will host a brief, informal webinar “Coffee with Charlie” on Thursday, January 14 at from 3-3:30 pm to help answer questions and alleviate concerns. The half hour webinar will include a short presentation followed by a Q&A session.

The new stimulus package and other measures will surely help businesses in the months ahead. Should you have any questions or concerns, please connect with your GJM team. As always, we are here to help as your trusted advisors.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.