New SBA Guidance & Insight for Your Company

January 11 2021 | by Chad Bumbaugh, CPA

As guidance continues to be released regarding COVID relief, including PPP Round 2 and refunding for EIDL advances, Stambaugh Ness is committed to bringing you the latest information to help you make the best decisions for your organization. Information provided here is what we know as of January 11, 2021.

Employer Retention Credits (ERC)

PPP borrowers who meet specific criteria for being significantly impacted by COVID may now be able to retroactively claim ERC credits even if they received a PPP loan. ERC credits for 2020 are up to 50% of qualifying wages & health insurance paid up to $10,000 annually ($5,000 max credit potential). The ability to do both ERC & PPP is newly permissible under the December stimulus. Read our more in-depth summary of the ERC opportunity here. For now, if you meet any of the criteria below, we’d suggest a discussion before submitting your PPP forgiveness application; the ERC opportunity may impact the expenses you wish to utilize to claim forgiveness in order to maximize support for your business.

  • Had business operations fully or partially suspended due to orders from government authorities due to COVID-19.
  • Experienced a gross receipt decline of at least 50% in any one calendar quarter when comparing 2020 to 2019.

It is important to note that the ERC is available for 2021 at enhanced levels (70% of wages up to $10,000 per quarter (max credit capped at $10,000 per employee) with a gross receipt decline of only 20%, making it easier for businesses to qualify.

EIDL Advances and Forgiven PPP Loans

Recently, the SBA issued guidelines for lenders regarding the mechanics of how already forgiven PPP Loans would be refunded for EIDL Advances which were treated as forgiveness advances. Essentially the SBA will automatically repay the lender the EIDL Advance (with accrued interest), and then lenders must notify borrowers of the repayment and either 1) the resulting reduction in the loan balance or 2) a forthcoming refund to be issued to the borrower.

PPP Loans – Round 1 and Targeted Round 2

Recently the SBA released the new applications for PPP Round 1 and Round 2 funding and “top line overviews” summarizing the key provisions of the programs. The applications follow two interim final rules released previously and summarize the interim final rule provisions. Links to these documents, which include more detail on eligibility and program mechanics, are included below. It is important to note that additional guidance is anticipated.

Key developments related to PPP updates are as follows:

  • Eligible businesses (outlined in the top line overview) who did not take Round 1 PPP funding have another opportunity to do so.
    In addition, Round 1 borrowers who repaid all, or a portion, of their PPP loans or who did not take the maximum loan amount have an opportunity to increase their funding.
  • Businesses meeting revenue declines of at least 25% in any one quarter when comparing 2019 to 2020 are eligible for a targeted round 2 of PPP. Round 2 of the PPP functions much the same way as PPP1 in terms of eligible costs, forgiveness requirements, and loan terms should full forgiveness not be achieved.
  • Earlier, the SBA issued an interim final rule defining gross receipts to determine eligibility – this definition can be found on the PPP round 2 application.
  • Funding is set to open Monday, January 11 for community financial institutions serving minority and women-owned businesses for first-time borrowers and on Wednesday, January 13 for second-time borrowers.
  • Other borrowers will be able to make loans “shortly thereafter,” but a date was not specified.
  • The need certification from the first round of PPP remains and relates to “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.”
  • The PPP Round 1 Interim final rule may be welcomed by many as it consolidates all of the pre-existing guidance into one document (and even includes a table of contents).

The closing date or ALL applications for these rounds of PPP funding is March 31, 2021, and funding is limited with no guarantee of additional funds. As a result, we strongly suggest assessing these opportunities now.

Top-line-Overview-of-First-Draw-PPP.pdf (treasury.gov)

PPP-Borrower-Application-Form.pdf (treasury.gov)

Top-line-Overview-of-Second-Draw-PPP.pdf (treasury.gov)

PPP-Second-Draw-Borrower-Application-Form.pdf (treasury.gov)

PPP Round 1 “Consolidation” Interim Final Rule

PPP Second Draw Interim Final Rule

Next Steps

For more details on PPP Round 1 & Targeted Round 2 and the payroll and income tax and other December stimulus provisions, you can view our December 28 Town Hall on-demand here.

SN is available to assist your business with navigating the Stimulus bill’s impact and subsequent SBA guidance. Please reach out to me to discuss the best options for your situation.


Chad Bumbaugh | Stambaugh Ness

Chad Bumbaugh, CPA | Managing Director, Entrepreneurial Services Group

During his career, Chad has worked with many different types of businesses on a wide range of tax and accounting issues. Beyond the traditional compliance work, he assists clients with tax and general business consulting matters, as well as implementations of new accounting pronouncements. He particularly enjoys opportunities to strategize with clients on how to more efficiently conduct operations, improve cash flow, and minimize tax burdens. The relationship which develops when you partner with clients to identify practice solutions is one of the highlights of his position.

Connect with Chad on LinkedIn.

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