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Tag: Paycheck Protection Program

PPP loans deadline extended to May 31

Businesses and banks received a two-month extension to apply for Paycheck Protection Program loans this week, as President Joe Biden signed legislation delaying the deadline for the latest round of PPP loans from March 31 to May 31.

This week’s extension takes some of the pressure off bankers and businesses, says Steve Yeakel, president and CEO of the Virginia Association of Community Bankers. So far in this 2021 round, he says, Virginia banks have written nearly 65,000 PPP loans totaling $4.49 billion.

This round of PPP loans is more targeted, with some additional challenges that come with second-draw loans, he says: “But at the end of the day, more money is getting to more people who really need it.”

Since the PPP loan program launched in April 2020 in the wake of the economic disruption caused by the pandemic, Richmond-based Atlantic Union Bank has processed 15,700 loans totaling approximately $2.2 billion — “the vast majority” of PPP loans in Virginia, bank president and CEO John Asbury says. Tthe program has brought more than 3,000 new customers to the bank since last year, Asbury says.

Atlantic Union has received a little more than 6,000 applications since the latest round of PPP began, writing more than $591 million in loans. So far, the SBA has granted a little more than 5,000 loan applications.

Atlantic Union stopped taking PPP loan applications March 19, but has reopened the process because of the extension. “The program keeps getting better,” Asbury says. “All changes being made are to the advantage of the borrowers.”

He and Alison Holt-Fuller, who runs the bank’s PPP program in her role as head of product and enterprise first line risk management, say some changes make the program more appealing.

Those include a more streamlined forgiveness process and the ability to take a second draw — including the potential for businesses to receive two draws in 2021, as long as the covered periods required by the program don’t overlap. They say another change is that businesses may apply for both a PPP loan and a shuttered venue grant.

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Business groups ask Va. lawmakers for higher PPP tax deductions

Virginia’s two legislative bodies have not yet agreed on an amount that Virginia businesses can deduct from federal Paycheck Protection Program loans they received last year, and how much of the loans they’ll have to pay state taxes on. Business groups are asking state lawmakers to allow higher deductions — especially for sectors like hospitality and restaurants that are still suffering from the COVID-19 pandemic’s economic impacts.

In two bills currently going through the General Assembly, the Senate has approved a $100,000 deduction, while the House of Delegates has agreed to only a $25,000 deduction — requiring businesses that received PPP loans to pay state taxes on all funding above those amounts. The maximum loan amount allowed under the program was $10 million; approximately 114,000 small businesses in Virginia received a total of $12.6 billion in PPP loans last year (including Virginia Business Media LLC). In January, the U.S. Small Business Administration opened a second round of PPP loans capped at $2 million each.

In December 2020, Congress stipulated that all PPP funds would be exempt from federal corporate taxes and also allowed businesses to deduct expenses paid with PPP funds. 

The two state bills, which would bring Virginia into conformity with the latest federal IRS code, will ultimately have to be reconciled before reaching the governor’s desk — and business groups know which way they want the decision to go: toward higher deduction rates.

In a letter to House Speaker Eileen Filler-Corn and Senate Majority Leader Dick Saslaw sent Wednesday, the Virginia Restaurant, Lodging and Travel Association says that both bills “unfairly limit tax deductions. PPP represented a temporary fix, which directly benefits Virginia’s fiscal outlook through reduced unemployment and lower Medicaid enrollment. But this legislation reverses this economic benefit by increasing state tax burdens when Virginia’s hospitality businesses can least afford it.”

VRLTA President Eric Terry notes in the letter that the state’s restaurant industry continued to lose jobs into December 2020, and the leisure and hospitality industry has lost more than 72,000 jobs statewide over the last year. He asks that legislators consider a higher deductible amount for hospitality businesses that were more adversely affected than other kinds of businesses, while voicing support for the Senate’s plan.

“As you consider legislation regarding tax conformity with federal standards, we ask that you take into consideration the exceptionally challenging situation of the hospitality industry,” Terry wrote. “The recent announcement of an additional $730 million in the mid-session budget re-forecast provides you with the ability to do more to help those in the hospitality industry which were most heavily impacted by COVID-19.

“Without action, our members will face surprise tax bills at a time when they should be focusing on surviving the winter and the pandemic. We ask that you consider creating a higher deductibility allowance for the hospitality industry to recognize the unique challenges our members continue to face.”

On Monday, Gov. Ralph Northam announced that state revenue is expected to be $730.2 million higher than expected for the next two years, jumping to $46.7 billion. In his statement, the governor said that the additional funds “allow us to move forward with our shared priorities — providing Virginia families and businesses the relief they need to get back on their feet, supporting public schools and giving our public workers a pay raise.”

The Virginia chapter of the National Federation of Independent Business released a statement Feb. 4 that praises the Senate’s recommended deduction of $100,000 and asks the House to reconsider its $25,000 limit.

“Small business owners were desperate when they took these federal loans after losing large amounts of revenue due to state-mandated shutdowns and restrictions,” NFIB State Director Nicole Riley said in a statement. “They followed all the rules set by Congress to keep their employees paid and off unemployment, so at the federal level the loans were forgiven and all related expenses were deductible. Now, almost a year later, when so many small businesses are still struggling to stay afloat, setting a higher cap on deductions will help them recover and prevent more business closures.”

Virginia is one of about 20 states that freeze conformity of state tax rules with federal tax code as of a particular date. Currently, Virginia’s state tax laws conform with pre-pandemic IRS code as it existed on Dec. 31, 2019.

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Applications open Jan. 19 for new PPP round

The relief loan floodgates will reopen Tuesday, as the U.S. Small Business Administration opens the latest $284.5 billion round of Paycheck Protection Program (PPP) funding available. 

This time, borrowers who received allocations during the initial rounds of PPP funding in 2020 can reapply under Second Draw PPP Loan applications. First Draw PPP Loans are for borrowers who had not received a loan before Aug. 8, 2020, while the Second Draw PPP Loans are for eligible businesses with 300 or fewer employees.

PPP loans are aimed at helping small businesses meet payroll costs and make mortgage interest, rent and/or utilities payments due to the economic crisis caused by the COVID-19 pandemic.

Eligible Second Draw PPP Loan borrowers must demonstrate at least a 25% drop in gross receipts between comparable quarters in 2019 and 2020, and second-round loans are capped at $2 million. While this will be the first round in which PPP recipients can apply for a second round, Ryan Losi, executive vice president of CPA firm Piascik, told Virginia Business in December 2020 that the requirement to show a drop in revenue could disqualify some small businesses seeking additional funding.

“That’s going to eliminate a lot of businesses that have basically been able to sustain, or have even prospered, during this time,” he said. Andrew Lohmann, an executive vice president of Richmond-based law firm Hirschler, also advises businesses interested in applying for a Second Draw Loan to carefully review 2019 and 2020 financial records.

“Be aware that gross receipts doesn’t necessarily translate to gross revenue or net income — it’s a test that’s based on existing SBA standards,” he says. “In the second half of 2020 there was a fair amount of merger and acquisition activity, and borrowers are advised to look at how the … new Second Draw PPP will apply to how you calculate gross receipts, either based on acquisitions that a borrower has made or dispositions the company has made during 2020.”

With the application portal set to reopen Tuesday, banks are prepared to take on another round of PPP loan requests.

“While it is difficult to predict with certainty, we are anticipating strong demand for this next round of PPP based on inbound inquiries and conversations with our clients,” says Atlantic Union Bank CEO John Asbury. “Building off what we learned in 2020, Atlantic Union Bank has made all the necessary preparations to best manage this new round of PPP loans for both our current and new customers.”

Asbury encourages small businesses to “continuously check” the bank’s PPP page for updated information about the current round of funding.

Lohmann, however, doesn’t expect demand to be as high for Second Draw applicants. “I’ve heard fewer companies, fewer clients talking about taking advantage of the Second Draw, either because they have weathered the storm or unfortunately the second round came too late,” he says. 

Despite difficulties opening its application portal on time during the initial rounds of PPP funding, McLean-based Capital One Financial One Corp. (Virginia’s largest bank) announced its plans to accept applications starting Tuesday.

“Capital One is committed to supporting our small business customers during this challenging time and will participate in the next round of PPP loans,” according to a Capital One statement. “We will begin accepting PPP loan applications on Tuesday, Jan. 19, 2021, when the SBA portal opens to large banks.”

Of the original PPP round that closed last summer, 5.2 million applicants nationwide received $525 billion in loans as of Aug. 8, 2020. The initial round of funding was split between two iterations during spring and summer 2020.

“A second round of PPP could not have come at a better time, and the SBA is making every effort to ensure small businesses have the emergency financial support they need to continuing weathering this time of uncertainty,” SBA Administrator Jovita Carranza said in a statement. “SBA has worked expeditiously to ensure our policies and systems are relaunched so that this vital small business aid helps communities hardest hit by the pandemic.

“I strongly encourage America’s entrepreneurs needing financial assistance to apply for a First or Second Draw PPP loan.”

Loan recipients must apply for forgiveness through their PPP lender, compile data including payroll and non-payroll costs and submit all information to the lender, according to the SBA. Businesses that had loans of $50,000 or less can fill out a more streamlined application, the SBA announced in early October. 

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PPP loans could make comeback in time for holidays

Congress could pass a third round of the U.S. Small Business Administration’s Paycheck Protection Program funding just in time for the holidays. 

A bipartisan group of U.S. senators on Monday introduced a $908 billion coronavirus relief bill, including an estimated $300 billion set aside for another round of PPP funding. In April, the first $349 billion round of PPP funding was depleted in less than two weeks. 

“It’s possible that PPP will be addressed in the omnibus budget bill that will presumably pass by this Friday,” says Virginia Bankers Association CEO and President Bruce Whitehurst. “From the bank’s perspective, bankers are in the same place as small business owners and all of us waiting to see what Congress will or will not do.”

An additional $320 billion round of PPP funding was passed shortly after the first April round, but it took longer to run out in light of controversies that erupted over larger corporations receiving  funds intended for small businesses. Messages from the U.S. Department of the Treasury encouraging only businesses that really needed the money to apply also contributed to the slower round, Whitehurst says. 

“We do have this great sense that there’s going to be some type of significant relief in the near future, and it sure seems like it’s necessary,” says Gary Thomson, managing partner of Richmond-based Thomson Consulting LLC and former chairman of the board of the Virginia Society of Certified Public Accountants.

Other funding would include unemployment assistance, local and state government support, as well as transportation and health care funding. Approximately 113,000 small businesses (including Virginia Business Media LLC) received funding in Virginia from the federal relief program intended to assist small businesses meet payroll costs and make mortgage interest, rent and/or utilities payments amid the economic crisis caused by the COVID-19 pandemic.

The new legislation is expected to be released in two pieces, according to Monday reports, with $748 billion set aside for unemployment insurance, small business aid and health care funding. The remaining $160 billion would go to state and local aid. 

Expected differences for this round of PPP funding include an opportunity for businesses that have already received PPP funding to apply again, and the bill appears to have language that would allow for the deductibility of business expenses that are paid with the proceeds from PPP loans, says Ryan Losi, executive vice president of CPA firm Piascik.

“If that’s the case, well, then not only is it obviously helpful for those who take round three PPP loans who qualify, but also I presume it’s also a fix for those who took PPP proceeds in round one and two earlier this year,” Losi says. 

The catch, however, is that businesses that are again applying for funding must show at least a 30% drop in revenue during one of the quarters of 2020. According to Losi’s expectations for the potential new funding, if a company can’t show a decrease in revenue, it won’t qualify for this round.

“That’s going to eliminate a lot of businesses that have basically been able to sustain, or have even prospered, during this time,” Losi says. 

Other potential changes for this round could include industry-specific funding for businesses still especially struggling (such as tourism and hospitality businesses) and the option for organizations such as chambers of commerce and trade associations to apply.

“We believe the federal government learned a lot about industries that were affected,” Thomson says. “There is this sense that they want to look out for even smaller companies.”

It still remains unknown what demand may look like for this next round of PPP funding, but CPAs and bankers are prepared for a potential round of funding during the holiday season. They do, however, encourage businesses interested in funding to start working with their bankers and CPAs now to have any and all likely documentation prepared ahead of time. It remains unclear whether there will be any changes to requested documentation for this potential new round of funding.

“There was a point where this thing turned and became efficient,” Thomson says of the first round of PPP funding, which was met with backlogs and technical difficulties, among other roadblocks. “I would certainly expect that everyone involved whether it be the federal government, banks, clients and others learned a lot from that.”

Thomson encourages businesses to consider whether the funding is necessary and how many people they are planning on keeping on the payroll.

“It’s a good time to do business planning,” he says.

Whitehurst agrees that this round could take flight more smoothly after the first round was “like building an airplane while it was on takeoff.”

“Banks are standing by and waiting to see what comes forward,” he says. “And they’re ready.”

 

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These 16 Va. companies received $10M PPP loans

The U.S. Small Business Administration on Tuesday released additional information about all approved borrowers from its $659 billion Paycheck Protection Program (PPP) small business relief program, this time including exact company names, loan amounts, addresses and other information. 

Previously, the government in early July had released an incomplete list of recipients, including only ranges of funding, not specific amounts. Approximately 113,000 small businesses received funding in Virginia (including Virginia Business Media LLC) from the federal relief program intended to assist small businesses meet payroll costs and make mortgage interest, rent and/or utilities payments due to the economic crisis caused by the COVID-19 pandemic.

The maximum loan amount allowed under the program was $10 million, and approximately 5.2 million loans were approved through the program, according to SBA data.

Of the top 25 Virginia PPP recipients, more than half received the maximum amount.

The top 25 Virginia PPP recipients include (company name, locality, lender, loan amount):

  • Delta Star Inc., Lynchburg, JPMorgan Chase Bank, $10 million
  • Airline Tariff Publishing Co., Sterling, PNC Bank, $10 million
  • Digital Intelligence Systems LLC, McLean, First Commonwealth Bank, $10 million
  • Colonna’s Shipyard Inc., Norfolk, TowneBank, $10 million
  • Ncgcare Inc., Richmond, Atlantic Union Bank, $10 million
  • Tidewater Physicians Multispecialty Group PC, Newport News, TowneBank, $10 million
  • Potomac Family Dining Group Operating Co. LLC, Herndon, City National Bank of Florida, $10 million
  • Calibre Systems Inc., Alexandria, Atlantic Union Bank, $10 million
  • Woodfin Heating Inc., Richmond, TowneBank, $10 million
  • OrthoVirginia Inc., Richmond, Wells Fargo Bank, $10 million
  • The Medical Team Inc., Reston, Sonabank, $10 million
  • Burgerbusters Inc., Virginia Beach, BBVA USA, $10 million
  • Loudoun Medical Group PC, Leesburg, PNC Bank, $10 million
  • Tecnico Corp., Chesapeake, Truist Bank, $10 million
  • Timmons Group Inc., Richmond, TowneBank, $10 million
  • Fire & Life Safety America Inc., Henrico County, First Commonwealth Bank, $10 million
  • Williams, Mullen, Clark and Dobbins PC (Williams Mullen), Richmond, Truist Bank, $9.95 million
  • Wo Grubb Steel Erection Inc., Chesterfield County, Truist Bank, $9.75 million
  • Airlines Reporting Corp., Arlington, U.S. Bank, $9.44 million
  • Mhi Hospitality Trs LLC, Williamsburg, Fifth Third Bank, $9.43 million
  • Winebow Inc., Glen Allen, Bank of America, $8.9 million
  • Five Guys Enterprises LLC, Lorton, Regions Bank, $8.57 million
  • Rappahannock Electric Cooperative, Fredericksburg, CoBank ACB, $8.48 million
  • Maryland and Virginia Milk Producers Cooperative Association, Reston, AgChoice ACA, $8.39 million
  • American Diabetes Association Inc., Arlington, Manufacturers and Traders Trust Co., $8.32 million

Several news organizations, including The Washington Post, Bloomberg LP, Dow Jones & Co. Inc., Pro Publica Inc. and The New York Times Co., sued the SBA in mid-May for the release of data regarding small businesses that had received funding. 

Small businesses that received the forgivable PPP loans are allowed to use the funds to meet payroll costs and make mortgage interest, rent and/or utilities payments. Loans can be fully forgiven if 75% of the funds are used for payroll costs, according to the SBA. The other 25% can be used to make mortgage, rent or utilities payments. The program closed in August.

Before the second round of the funding was announced on April 24, large, publicly traded companies such as Shake Shack, Ruth’s Chris Steak House and AutoNation as well as large private enterprises like the Los Angeles Lakers returned tens of millions of dollars in relief funds after they came under fire for applying for PPP funding through smaller subsidiaries in order to receive money that was intended to go to small businesses. The latest data released, however, still shows that more than half of the funding went to just 5% of recipients and national chains received the maximum funding amount, according to a Washington Post analysis of PPP data.

Loan recipients must apply for forgiveness through their PPP lender, compile data including payroll and non-payroll costs and submit all information to the lender, according to the SBA. Businesses that had loans of $50,000 or less can fill out a more streamlined application, the SBA announced in early October.  

“We are committed to making the PPP forgiveness process as simple as possible while also protecting against fraud and misuse of funds,” Treasury Secretary Steven T. Mnuchin said in an Oct. 8 statement. “We continue to favor additional legislation to further simplify the forgiveness process.”

Deputy Editor Rich Griset contributed to this report.

 

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