As businesses continue to struggle from the effects of COVID-19, there are Government funding options available, as the Economic Aid Act was signed into law on December 27th, 2020. It includes an expanded employee retention tax credit, and round 2 of the Payroll Protection Program (PPP).
IMPACT, an organization for Ironworkers, broke down the program for its members, Cares Act 2.0, on a webinar held last week, and the information is applicable to auto glass businesses as well. Cassandra Langley, from Lescault Walderman Accounting, a firm that focuses specifically on the construction industry, went over some of the opportunities available to businesses.
Langley outlined the Economic Injury Disaster Loan (EIDL) which is designed to provide relief to businesses that are currently experiencing a loss of revenue due to COVID-19. It provides a low interest, 30-year maturity loan that is not forgivable.
“The company must have substantial economic injury,” said Langley. “This generally means the business must be suffering in order to take this.”
Another option is the Employee Retention Tax Credit (ERTC). “You can go back and retroactively get it for 2020,” she said. “You have to show a 50 percent drop from 2019 to 2020 or were shut down as non-essential by the Federal Government.” A number of window film companies fall into this category.
The ERTC 2021 only applies to 2021 payroll, and Langley pointed out it has a lot of differences when compared to the 2020 version.
“Now, it is a 20 percent revenue drop in a quarter to quarter comparison,” she said. “You have a little more potential to possibly qualify for this.”
Companies have a possibility of receiving $14,000 per employee, and the limitation has been raised to 500 employees.
When it comes to Round 2 of PPP, Langley said same requirements from Round 1 remain, but additional expenses can be factored in. “This can include things like operational expenses [subscriptions and software], personal protective equipment and expenses for employee safety, and more,” she said. But there, is an important factor to keep in mind.
“You have to have used your Round 1 lending before you apply for Round 2,” she said.
Additionally, companies must show a 25% reduction in gross revenue, and when applying they can use 2019 or 2020 payroll amounts.
The full webinar may be viewed here.