WCBID COVID-19 Emergency Response Resources for Small Businesses as of 4/30/21
Grants & Loans
Restaurant Recovery Grants
Restaurants and watering holes will want to check out this opportunity to backfill nearly all “pandemic-related” revenue loss, less funds received under the PPP. The March American Recovery and Plan Act includes Restaurant Recovery Relief funding in the form of grants, and unlike past grants and loans, the income is not taxable and uses are very flexible. See this useful overview from Forbes.
The SBA announced it will open registrations on April 30 at 9 a.m. EDT (where you can register for an account in advance on restaurants.sba.gov) and applications on May 3 at 12 p.m. EDT. The first funding applications will be for smaller and women, veteran and socially disadvantaged owned establishments.
The basis and documentation to show losses is very similar to what the City and our district used, so many of you should be in a good position to apply. Essentially this the difference between 2019 and 2020 gross revenue less PPP awards. While this means that you can recover that full amount of losses from your restaurant in 2020 up to $5M, it first-come, first-served.
WCBID Covid Relief Fund Closed Pending further Fund Availability
With all of the challenges that Covid-19 has brought, West Colfax BID is pleased to announce that we made $476,000 in Covid-19 Relief grants to 36 WCBID businesses and nonprofits focused on economic development in 2020. For all our efforts to address the pandemic, see our 2020 Annual Letter here.
Employee Retention Tax Credit
Another funding source is now available in time for the tax season. The Employee Retention Tax Credit pays out up to $5,000 per employee for 2020, and up to $7,000 per employee for 2021, and can now be used even if you got a PPP forgivable loan. According to the Colorado Restaurant Association, 98% of restaurants qualify for this credit.
To claim the ERTC for 2020, you’ll need to show a 50% decrease in revenue over any quarter, OR, (2) a government mandate impacting their business (i.e., shortened hours, limited seating, etc.)
To claim the credit for 2021, you must only show a 20% decrease, and can claim the credit for Q1 (January-March) & Q2 (April-June).
More details here.
PPP Update and Second Round Draws
Take advantage of a 14-day Paycheck Protection Program (PPP) application window that the SBA opened just for small businesses and nonprofits with fewer than 20 employees, beginning today, February 24th. Contact your lender to apply. You can also find other lenders here or by contacting us.
Wondering if a second PPP infusion will be beneficial for your business? See these 4 reasons why it might be, especially if you are in the hospitality sector.
Also note that the overall deadline of May 31st for PPP 2nd draw loans is approaching.
- PPP borrowers can set their PPP loan’s covered forgiveness period to be any length between 8 and 24 weeks to best meet their business needs
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
- The PPP provides greater flexibility for seasonal employees;
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
- Congress affirmed that expenses covered by a PPP loan are now deductible
- Community Development Financial Institutions
- Initially only community financial institutions will be able to make First Draw PPP Loans on Monday, January 11, and Second Draw PPP Loans on Wednesday, January 13. The PPP will open to all participating lenders shortly thereafter.
(Source SBA Guidance 1/8/21)
The principal amount of a Second Draw PPP loan is limited to the lesser of US$2 million or 2.5 multiplied by the average monthly payroll costs for most borrowers or 3.5 multiplied by the monthly payroll costs for borrowers who use NAICS 72–the accommodation and food service industry. Borrowers can calculate their loan amounts based on payroll costs for calendar year 2019, calendar year 2020, or (for entities) the actual trailing 12-month (TTM) period before the application. This should benefit borrowers whose payrolls have declined during the pandemic.
A Second Draw PPP borrower must demonstrate a revenue decline of 25% in any quarter of 2020 over the corresponding quarter OR submit tax returns showing a 25 percent decline in Fiscal Year (FY) 2020 revenue over FY 2019. For this purpose, “Revenue” is defined to mean “gross receipts”.
Source: National Law Review, 1/11/21
Taxation of Grants & Loans
You might think that a forgivable loan and grant funded through the same Act of Congress would be carry the same tax consequences, but guess again: we all know the IRS always keeps things less than straightforward. Here are some guidelines (with of course a caveat to consult with your tax professional):
The IRS has confirmed that a grant to a business constitutes gross income under the Internal Revenue Code and therefore is taxable. This makes sense from the point of view that the grants are meant to fill the gap in revenue due to Covid, but less sense if the amount was used for PPE or other Covid mitigation measures for the benefit of the public. You might want to check with a tax advisor on the tax treatment of any grant amount used for those measures.
Meanwhile, for PPP loans that are forgivable, the outcome is more tax neutral. The cancelled debt is excluded from gross income. Accordingly, expenses paid with the proceeds are not deductible, but neither is the forgiven loan amount taxable. Treasury guidance on this matter here.
How to get PPP Loans Forgiven
Guidance and details on PPP Forgiveness is now available.
Work with trusted advisors to set up and keep accurate records. The best way to remain prepared is to standardize your record keeping for your PPP loan and to have all your documents easily accessible. Focus on records for the allowable uses under your PPP loan, such as payroll reports, utility expenses, mortgage interest and rent expenses. If you need assistance with this, contact us and we can refer you to a great, local, no-fee resource at firstname.lastname@example.org.
Three PPP Loan Forgiveness Application Forms are now available:
- Form 3508S (Instructions) –simplified application for borrowers with loans of $50,000 or less
- Form 3508EZ (Instructions)
- Form 3508 (Instructions)
Plan to submit records that can be quickly and easily reviewed by your lender. Remember your lender will have thousands of these PPP forgiveness applications to review, so keep your application concise and to the point. Maintain more detailed records for up to 7 years for any possible additional followup or review.
When to apply. Borrowers have time to wait to file for forgiveness. Borrowers may apply for loan forgiveness as soon as they have met the eligible use criteria, or, at any time up until 10 months after the end of your covered period (10 months + 24 weeks).
Work with your bank. Wait for guidance from your lender on when to apply for PPP loan forgiveness. Many banks are also waiting for final rulings and anticipated changes to the Paycheck Protection Program. Lenders are building out their own internal systems to process these efficiently and through their websites.
Other tools to assist you through the Paycheck Protection Program (PPP) forgiveness process are available. Watch for new content from trusted sources like the Colorado Small Business Development Centers, the AICPA and your CPA.
Source: Colorado Office of Economic Development and International Trade verified by the SBA.
Back to Brick & Mortar....with Outdoor Seating
Back to Brick & Mortar
With the City moving to open more and more businesses over time, we thought you would might want to check out this great resource on how to successfully reopen safely and instill confidence in employees and customers. Back to Brick & Mortar Guidebook by Access offers best practices and considerations for businesses, compiled with detailed guidance from experts in public health, real estate strategy, communications, and retail operations.
&Access, who brought you Back at Brick and Mortar, developed Safety Signage Packages for in-store and outdoor use. Download yours today here.
Expanded Outdoor Seating
Speaking of the out-of-doors, interested in outdoor seating for your restaurant or drinking and eating establishment? We drafted this letter to the Mayor calling for urgency in creating flexible and creative rules for expanded outdoor seating with some 50 restaurants, business districts and industry groups signing on.
In response to our advocacy, the Colorado Restaurant Association and others, Denver launched a temporary program to expand outdoor seating for restaurants, bars, and similar businesses to allow for greater physical distancing and safety for patrons. You can submit a proposal here for the city to review. The application is straightforward, with considerations to include plans and accommodations for safety, mobility, and local and emergency access. Check out the FAQs for more guidance.
Cheney Bostic of Studio Seed has created a Friendly Business Guide for Outdoor Expansion. If you want to expand your outdoor space for patrons, but aren’t sure where to start – check it out for ideas and examples that may work for your space.
Feel free to contact us at email@example.com with any questions.
If you are interested in this and related efforts, please email firstname.lastname@example.org subject line “advocacy”.
Managing Overhead and Unemployment
Lease & Loan Negotiations
A number of lenders are entertaining loan deferrals, as are landlords re-negotiating leases with short term abatements or concessions in return for an extended term, for example.
Depending on the circumstances, some options include:
- 3 months deferred payment, added to end of lease
- 50% reduction for 3 months
- Interest-only payments, full utilities/CAM fees
- Base rent on reduced revenue-generating square footage (i.e, kitchen only in a restaurant just doing take-out/delivery)
Similarly, property owners and businesses are negotiating with their banks for loan modifications, including:
- Reduced payments
- Interest-only payments
- Loan payment deferrals
Be prepared to demonstrate to your bank how you are being affected by current events and what you’ve done to reduce expenses through salary reductions, staff layoffs, landlord negotiations, vendor and supplier accommodations.
This resource from the Colorado Restaurant Association (but generally applicable to employers in Colorado) goes into the details of unemployment. It includes information on “jobs attached” and “work share” as methods to allow employees to, respectively, more easily collect unemployment compensation but return to payroll, or remain on a reduced payroll while collecting unemployment at the same time. It also has information to share with unemployed employees, and this link has more resources on how they can access a meal. Finally, note the PPP Fact sheet, question 40 regarding loan forgiveness when efforts to rehire are not successful.