“I think people are just tired of trying.”
I was talking to Roy Porter the other day, one of the best minds in catering, about why I was so excited about the new round of PPP and he made that statement. The good news is that this round is *so* much better.
This new round of PPP is finally some great news for event professionals and, in spite of what 2020 brought, you need to take action on it asap. It finally feels like someone wrote a letter to Congress about the event industry and then Congress actually read it.
We recommend talking to your accountant for your specific information, but we wanted to share our interpretation of the highlights.
What is PPP?
It’s a US government loan incentive program to help businesses recover from COVID. This was initially released in April of last year and was very quickly changing. Unfortunately for caterers, it was less than geared towards event professional. Initially, the release didn’t consider self-employed people or how COVID affected our companies. Then, even if you did qualify, we ran across the problem question of, “Do I just hire everyone back when there are zero catering events?”
The second round of PPP has been much more successful. There are several key things they’ve implemented keeping our industry in mind.
It’s important to note: this is an actual loan but it also is forgivable if used within the forgivable guidelines.
What is so different about this time around than last?
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One of the most important differences is that only the hardest hit industries qualify. This makes it easier to qualify and actually get the funds before they run out.
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This time around, they’ve expanded what is qualified for being forgivable. You used to be only able to spend a small % on non-payroll. But they realized, not everybody can just hire their team back again immediately. So they’ve allocated up to 40% on non-payroll expenses to be forgivable. In addition, they’ve allocated 4 new categories of non-payroll items that are included.
- Covered worker protection expenditures: operating or capital expenditure made to comply with COVID-related requirements established the Department of Health and Human Services, the Centers for Disease Control the Occupational Safety and Health Administration or by state and local governments.
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Covered operations expenditures: payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing of payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records, and expenses.
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Covered property damage costs: costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that were not covered by insurance or other compensation.
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Covered supplier costs: expenditures made to a supplier that were a) essential to the operations of the entity at the time the expenditures were made and b) made pursuant to a contract or purchase order in effect any time before the covered period or, for perishable goods, any time during the covered period.
Is it even worth the effort of signing up? What if I tried last time and they ran out of money?
Yes! There are several key differences mentioned above that make it worth it. Plus, they’ve limited the number of companies who qualify down to the specific companies who have been hurt the most.
What if I’ve received the previous PPP?
You can still qualify! You have to have used all of your funds from your previous loan.
If this is a first time PPP, can we still use the 2019 numbers?
Yes. Initial Borrowers are required to satisfy the eligibility criteria set forth in the original CARES Act, which allows you to choose between a couple periods. Here's what the Smart Asset Blog has on that:
"To calculate your payroll costs, you can use averages costs from calendar year 2019 or from the previous 12 months. If your business launched in July of last year or later, you can use the average monthly costs from January 1, 2020 to February 29, 2020. (Many banks are telling applicants with older businesses to use this year’s numbers if they are more favorable to them than last year’s.) If you are a seasonal business, you can use the numbers from February 15 or March 1, 2019 to June 30, 2019.
Does the Full-time Employee maintenance still apply?
Based on what we're seeing, the answer is still yes - the FTE maintenance applies with some slight changes.
What if I’m self-employed?
You can still qualify. There’s a specific formula that is calculated based on profit from your Schedule C. Keep in mind that if, in 2019, you tried a smart tax play of reducing your profit to the max, you’ll qualify for less.
When does it open?
It's open now until March 31. But apply ASAP!
How much do I qualify for?
If you have a NAICS code that begins with 72, you can qualify for 3.5x. If you’re self-employed, it’s based on your schedule C.
How difficult is it to apply?
You can plan on some leg work, but most of it will actually be involved with coordinating with your bank or accountant. They’ve extremely simplified down the application for businesses getting less than $150k. If you're a Curate customer, we're glad to assist you in pulling reports to show that your revenue dropped.
How long do I have to spend the money?
You'll be able to choose between an 8 week period and 24 week period. The longer period will allow you to have more time to make the expenditures but the shorter period would allow you to get your loan forgiven quicker.
Who do I talk to?
Your bank / Accountant
What if I don't have a bank that is working with me?
Our friends at Nowsta mentioned last PPP they were able to work with a great bank called Customer's Bank. We're trying to connect with the bank still to confirm, but it's a good starting point.
Additional Information:
https://www.journalofaccountancy.com/news/2021/jan/sba-treasury-issue-ppp2-guidance.html