Santa Clara County Business & Workplace Updates
PPP Direct Forgiveness Portal
The U.S. Small Business Administration (SBA) has launched a Payment Protection Program (PPP) Direct Forgiveness Portal, which will help streamline the forgiveness process for loans of $150,000 or under, and allow small business owners to apply directly through the SBA. The new forgiveness platform will begin accepting applications from borrowers on August 4, 2021 and is currently operating under an invite-only pilot period.
Small business owners who applied for a PPP loan should be aware of the processes and requirements to apply for PPP loan forgiveness. Taking the following steps to complete the loan forgiveness process will give you peace of mind.
Here are some key facts to consider as you navigate the process.
About the PPP Direct Forgiveness Portal
- Only some lenders will be participating in the SBA portal. Lenders may opt in to using the portal instead of handling the forgiveness process themselves.
- Only PPP borrowers with loans under $150,000 may use the SBA portal. If your loan is larger, you will need to apply for forgiveness through your bank. The SBA portal uses an electronic form equivalent to SBA Form 3508S.
- Upon receipt of notice that a borrower has applied for forgiveness through the portal, lenders will review the application and issue a forgiveness decision to the SBA, all within the portal.
- The SBA will be issuing more detailed guidance regarding
- the process for lenders to opt-in to the direct forgiveness portal,
- the process for borrowers with loans of $150,000 or less to access the portal and submit their loan forgiveness applications directly through the portal, and
- the process for lenders to access the applications in the portal to perform reviews of their borrowers’ applications, issue forgiveness decisions to the SBA, and request forgiveness payments from the SBA.
- During the transition period after the launch of the direct forgiveness process, lenders that opt-in will be expected to complete the processing of any applications that have already been submitted by borrowers to the lender and should inform such borrowers not to submit a duplicate loan forgiveness application through the portal.
After the launch of the portal, borrowers will continue to submit loan forgiveness applications to their lenders, rather than through the portal, under the following circumstances:
- The PPP lender does not opt-in to use the direct borrower forgiveness process;
- The borrower’s PPP loan amount is greater than $150,000;
- The borrower does not agree with the data as provided by the SBA system of record, or cannot validate their identity in the portal (for example, if there is an unreported change of ownership); or
- For any other reason where the portal rejects the borrower’s submission.
You can only apply through the SBA’s portal if you have not already submitted a forgiveness application with your lender..
Get in touch with your lender
The SBA began accepting forgiveness application forms on August 10, 2020. But while the SBA released its own form, borrowers may complete the forgiveness process through their lender, as they may have their own forms and requirements to process the application. Please note that some lenders have opted in to process the forgiveness process through the PPP Direct Forgiveness Portal, so make sure to get in touch with your lender to confirm their unique loan forgiveness process.
Some additional documents you may need to submit are:
- Payroll records
- Receipts and agreements for approved non-payroll costs (mortgage interest, rent, utilities)
- Other documents deemed necessary by the SBA
Be aware of the timeline
Small business owners may apply for PPP loan forgiveness at any time before the loan is due, but experts advise borrowers to initiate and complete the application forms within 10 months of having received the loan. After the initial 10 months pass, the PPP funding converts to a loan (at 1% interest rate) so you still have some time to get your application in.
You may not need to complete the loan forgiveness application
PPP loans under $150,000 borrowers are only required to sign and submit a one-page SBA-approved certification to the lender. Borrowers will also need to provide a description of the number of employees retained due to the loan, and the estimated amount of the covered loan spent on payroll costs and the total loan amount. Borrowers must attest that they complied with PPP loan requirements, including that at least 60 percent of the funds were spent on payroll.
The SBA announced on July 6, 2021 that it would eliminate the loan necessity review for PPP loans of $2 million or more, and said further guidance would be forthcoming.
Who qualifies for the EZ Forgiveness Form?
Certain borrowers are eligible to fill out the EZ Form, which is a simplified loan forgiveness form. Borrowers are eligible to fill out the EZ form if they meet one of the following criteria:
- Are self-employed and have no employees; OR
- Did not reduce the salaries or wages of their employees by more than 25%, AND did not reduce the number or hours of their employees; OR
- Experienced reductions in business activity as a result of health directives related to COVID-19, AND did not reduce the salaries or wages of their employees by more than 25%.
For more information and to see the frequently asked questions on loan forgiveness, visit the U.S. Small Business Administration’s FAQ about PPP Loan Forgiveness.
Business Grants and Loan Information
Partners available to help prepare loan paperwork:
Service Corp of Retired Executives SCORE
Minority Business Development Agency MBDA
Gilroy SBDC Rep: Business Advisor Mary Castillo Avalos, firstname.lastname@example.org or cell (831) 535-3705.
Please note that this situation remains fluid and information about programs is still evolving. These are the known resources available to businesses currently.
The California Competes Tax Credit (CCTC) and Grant Program (CCGP) are available to businesses that want to locate in California or stay and grow in California. Businesses of any industry, size, or location compete for over $180 million available in tax credits by applying in one of the three application periods each year. Applicants will be analyzed based on twelve different factors of evaluation, including number of full-time jobs being created, amount of investment, and strategic importance to the state or region.
The State of California Treasurer’s Office Small Business Resources Page has a great deal of information available for businesses including grants and other programs by County and City.
California Rebuilding Fund– 3 or 5-year term loans with a fixed annual interest rate that is currently 4.25%, businesses who employed 50 or less full-time equivalent employees (FTEs) and had gross revenues of less than $2.5 million or below in 2019 are eligible to apply.
Accion Opportunity Fund- Supporting the Resilience of Hard-Working Entrepreneurs, providing loans in a range of sizes through Opportunity Fund, as well as educational resources, coaching, and support networks in English and Spanish.
CDC Small Business Finance- Low-interest loan with affordable terms.
Lift Fund- Provided over $300 million in small business financing loans to more than 20,000 business owners.
Access + Capital- Their mission is to grow businesses and jobs in underserved communities.
California Treasurers Office- The California Capital Access Program (CalCAP) is a loan loss reserve program supporting small business lending.
Federal Tax Credits
Paid Leave Credit for Vaccines — The American Rescue Plan Act of 2021 (ARP) allows small and midsize employers, and certain governmental employers, to claim refundable tax credits that reimburse them for the cost of providing paid sick and family leave to their employees due to COVID-19, including leave taken by employees to receive or recover from COVID-19 vaccinations. The ARP tax credits are available to eligible employers that pay sick and family leave for leave from April 1, 2021, through September 30, 2021. For more Information see the IRS fact sheet.
Employee Retention Credit — New law extends coronavirus tax credit for employers who keep workers on payroll: New law extends coronavirus tax credit for employers who keep workers on payroll. The Taxpayer Certainty and Disaster Tax Relief Act of 2020, enacted December 27, 2020, amended and extended the employee retention credit (and the availability of certain advance payments of the tax credits) under section 2301 of the CARES Act.
Sick and Family Leave Credits — COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses: COVID-19-Related Tax Credits for Required Paid Leave Provided by Small and Midsize Businesses. The COVID-Related Tax Relief Act of 2020, enacted December 27, 2020, amended and extended the tax credits for paid sick and family leave under sections 7001-7005 of the Families First Coronavirus Response Act
Guidelines for the Commercial Eviction Moratorium
Information for Landlords of Small Business Tenants
If you are a landlord of a small business tenant that qualifies under the County’s eviction moratorium ordinance and you initiate an eviction for non-payment of rent during the moratorium, you must:
- Provide small business tenants with this written notice of the reason for the eviction and notice of the tenants’ rights when serving the notice of termination; and
- Provide resources for rental assistance programs.
You still have a right to collect rent if the small business tenant qualifies for protection under the moratorium. However, the protected small business tenant has 6 months after the moratorium ends to repay at least 50% of the past-due rent and 12 months after the moratorium ends to repay in full the past-due rent. You cannot charge a late fee. Before initiating any repayment plan with a small business tenant protected under this moratorium, you must first inform the small business tenant of these repayment protections. The ordinance prohibits negotiations between a landlord and small business tenant that result in the tenant’s waiver of its rights under the ordinance. You may risk being subject to civil fines and penalties, monetary damages and injunctive relief if you do not comply with the moratorium.
This moratorium does not apply to otherwise lawful or at-fault evictions for reasons other than nonpayment of rent due to a substantial loss and/or out-of-pocket medical expense as a result of COVID-19.
Information for Small Business Tenants
If you are a small business tenant, you can use this form to provide your landlord with documentation of substantial income loss and/or substantial out-of-pocket medical expenses that is directly related to your failure to pay rent as a result of the COVID-19 pandemic as soon as possible.
Examples of substantial loss of income due to COVID-19 include:
- Temporary closure of or reduction in operating hours of a place of business or substantial decrease in business income
Examples of documentation you can provide include:
- Bank statements or financial documents showing your business’ financial situation before and during the COVID-19 pandemic
You may be able to take your landlord to court if they do not comply with the moratorium or use their non-compliance in any eviction proceeding.
For more information about the eviction moratorium, please see our list of frequently asked questions.
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