This is a follow up to various Leech Tishman Client Alerts regarding certain Small Business Administration (“SBA”) COVID-19-related relief programs, namely Restaurant Revitalization Fund (“RFF”) grants, the Economic Injury Disaster Loan (“EIDL”) program, and the second round of the Employee Retention Credit (“ERC”). You can read our previous client alerts about: SBA Announces Launch of Application Portal for RRF Grants; SBA Enhancements to COVID EIDL Program; and Eligibility Requirements for the Second Round ERC.
On July 14, 2021, the SBA closed its first round RFF grants portal. The SBA was only able to fund approximately 101,000 out of the over 275,000 applications it received. Congressional efforts to add another $48 million to the depleted RRF in August 2021 failed.
Business entities that meet the eligibility requirements for the EIDL program, including sole proprietors, independent contractors, and private non-profits, but excluding agricultural enterprises, and who meet certain additional criteria, can apply for the Targeted EIDL Advance for up to $10,000 of funding. To be eligible for the Targeted EIDL Advance, applicants:
- Are in a low-income community as defined by 45D(e) of the Internal Revenue Code;
- Can demonstrate a more than 30% reduction in revenue during an eight-week period commencing on March 2, 2020, or later; and
- Have less than 300 employees.
In addition, subject to meeting eligibility requirements, recipients of the full $10,000 original Targeted EIDL Advance can take advantage of the Supplemental Targeted Advance of $5,000 that doesn’t require repayment. To be eligible for the Supplemental Targeted Advance, applicants:
- Are in a low-income community as defined by 45D(e) of the Internal Revenue Code;
- Can demonstrate a more than 50% economic loss during an eight-week period commencing on March 2, 2020, or later, compared to the same period of the previous year; and
- Have 10 employees or less.
On March 11, 2021, Congress passed the American Rescue Plan Act of 2021 (“ARPA”), extending the ERC for qualified wages paid after June 30, 2021, and before January 1, 2022. The extension enables taxpayers to take advantage of this credit for the third and fourth quarter payroll periods. Similar limitations and eligibility requirements for the first two quarters of 2021 apply for these latter two quarters of 2021. Taxpayers may take advantage of the ERC by applying prospectively for a cash refund by filing Form 7200 prior to filing their Form 941 quarterly payroll tax return. Alternatively, taxpayers may apply the credit against its current payroll tax liability in their respective Form 941. Taxpayers may continue to apply retroactively for the ERC for all periods beginning March 13, 2020, through the second quarter of 2021.
Section 3134 of the Internal Revenue Code, as enacted by ARPA, also adds a third category of employers eligible for the ERC for the third and fourth quarters of 2021. Specifically, businesses that began operations after February 15, 2021, irrespective of whether they would qualify under the existing gross receipts and partial or full suspension eligibility tests, can now also claim the ERC.
For additional information on eligibility or assistance with reviewing prior or pending applications for SBA COVID-19-related relief programs, please reach out to Irfan M. Dinani or Alexander J. Gase
Irfan M. Dinani is Counsel with Leech Tishman and a member of the Corporate Practice Group. Irfan is based in the Pittsburgh office and can be reached at 412.261.1600 or idinani@leechtishman.com.
Alexander J. Gase is an Associate with Leech Tishman and a member of the Corporate Practice Group, where he is also part of the firm’s Tax Group. Alex is based in the Pittsburgh office and can be reached at 412.261.1600 or agase@leechtishman.com.