Correction to ERC post, and BofA PPP loan update
The big banks will start to limit new PPP applications over the next week.
So, I made an error in my post yesterday explaining the extension of the Employee Retention Credit (ERC). I suggested that you could qualify in Quarter 4 2021 if you had a 20% reduction from Quarter 3 in 2021. That is incorrect. You can qualify in either of these two ways:
Gross receipts in Quarter 4 of 2021 are 20% less than gross receipts in Quarter 4 of 2019, OR
Gross receipts in Quarter 3 of 2021 are 20% less than gross receipts in Quarter 3 of 2019
And if you qualify in Quarter 3 itself via the gross receipts test, you would get to use the ERC in Quarter 4 via the Bonus Quarter.
I’ve updated the original post with the corrected example tables showing how to qualify.
This stuff is complicated! So make sure to read everything through and check twice. Even I get tripped up on it.
PPP Applications - Time to put in your 2nd Draw Application
Bank of America just announced that they will stop taking new applications for PPP after 5pm today. So if you use Bank of America, make sure to get your application in. (You do not need to submit all the supporting materials though, those are due by March 20th).
Other banks are still processing loans, and even if you used Bank of America for your first loan, you can process your second loan at any other lender. Other BIG banks will start to follow in the coming week, but I think a lot of the lenders that are not the big banks will still be processing loans for at least 10 more days (Biz2Credit, Paypal, Kabbage, Cross River, etc). Most lenders will/should give more notice than Bank of America of when their new loan deadline will be.
I know many camps are still waiting for their first draw increase to be processed before applying for their second draw. There should no longer be any delays on this, so start pressuring your lender to push that through.
Should you go ahead with your second draw application if your loan increase is not done? I don’t know. I haven’t seen anything from SBA to say you have to get your increase before you get a second draw loan. I do think it won’t prevent you, but there is some risk. You’ll need to weigh the options.
And what about the moratorium on loans for companies with less than 20 staff? That ends today and most camps meet that size limit, as the employees are typically defined as the number of employees in February 2020.