News & Announcements

2021 HSA Limits Announced

For 2021, the annual limit on deductible contributions to a Health Savings Account is $3,600 for individuals with self-only coverage under a High Deductible Healthcare Plan (a $50 increase from 2020) and $7,200 for family coverage (a $100 increase from 2020).

What does it mean to be a High Deductible Healthcare Plan? For 2021, the lower limit on the annual deductible is $1,400 for self-only coverage and $2,800 for family coverage, both unchanged from 2020. The upper limit for out-of-pocket expenses is $7,000 for self-only coverage and $14,000 for family coverage, both increased from 2020.

Main Street Loan Program Option

The Main Street Program is a Federal program to help Small to Mid-sized businesses as a third lending option, mainly targeted at those who cannot obtain other relief.  It is in most respects just a Federally insured loan program that will be offered through banks and credit unions.  Based on the likely demand and traditionally stringent underwriting requirements, the process may be long and expensive.  They are also large in size and are likely to over-leverage most small businesses using 4 times EBITDA.  As a result of the large amount and it being placed in first position, existing borrowers may have a difficult time getting funds without first repaying their other loans.  Other traditional financing vehicles would seem to be more favorable than this program both in cost and time.  *The program has not been opened by any lenders as of yet and it is unclear when that will be.

Read more: Main Street Loan Program Option

House Passes Bill To Give Small Businesses More Flexibility In Spending PPP Loans

The House of Representatives on Thursday, May 28th  passed new legislation that would make it easier for businesses to have their Paycheck Protection Program loans forgiven by relaxing restrictions on how the loan money can be used and extending the period that businesses have to use the funds.

KEY POINTS

  • The bill would extend the forgiveness period for PPP loans from 8 to 24 weeks.
  • Reduces payroll spending requirements from 75% of loan funds to 60% of loan funds, giving businesses more flexibility in deciding how to allocate the emergency funds.
  • Extends from two to five years the time new PPP loans must be paid back if the amount provided doesn't convert into a grant.
  • Extends deadline to rehire workers beyond Jun 30th to December 31st 2020.
  • Allow PPP Loan recipients to defer Payroll taxes until the end of 2020
  • Extends the deadline for applying for the loans until Dec. 31, from June 30.
  • This bill is now headed to the Senate, where it is expected to pass.

PPP Loan Forgiveness Update

On May 22nd the Treasury and Small Business Administration (“SBA”) released a new Interim Final Rules (“IFR”) on Loan Forgiveness

Timing Requirements
Many borrowers have sought guidance on the deadline for submitting the Loan Forgiveness Application. The interim final rule does not clarify whether the borrower is subject to a deadline for submitting the application.  For loans that are not reviewed by the SBA prior to the lender’s decision on loan forgiveness, lenders must issue decisions on loan forgiveness to the SBA within 60 days from receipt of a completed application, and the SBA will remit the appropriate forgiveness amount, plus any accrued interest, to the lender within 90 days thereafter.

“Incurred and/or Paid”
The issue of whether expenditures must be both incurred and paid versus incurred or paid within the eight-week forgiveness period has generated considerable confusion. The interim final rule provides that, “In general, payroll costs paid or incurred during the eight consecutive week (56 days) covered period are eligible for forgiveness.” This language appears to suggest that payments made early in the eight-week period are eligible for forgiveness even if they relate to payroll incurred prior to the start of the eight-week period, although we will monitor subsequent guidance closely for further clarifications or changes. Tracking the language of the application, the interim final rule confirms that the eight-week period begins on the date of loan disbursement, although borrowers may elect an “alternative payroll covered period” beginning on the first day of the first payroll cycle after loan disbursement.

Read more: PPP Loan Forgiveness Update

SBA provides more guidance on PPP Loan Forgiveness

46. Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?

Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates,20 received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans. This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.

Importantly, borrowers with loans greater than $2 million that do not satisfy this safe harbor may still have an adequate basis for making the required good-faith certification, based on their individual circumstances in light of the language of the certification and SBA guidance. SBA has previously stated that all PPP loans in excess of $2 million, and other PPP loans as appropriate, will be subject to review by SBA for compliance with program requirements set forth in the PPP Interim Final Rules and in the Borrower Application Form. If SBA determines in the course of its review that a borrower lacked an adequate basis for the required certification concerning the necessity of the loan request, SBA will seek repayment of the outstanding PPP loan balance and will inform the lender that the borrower is not eligible for loan forgiveness. If the borrower repays the loan after receiving notification from SBA, SBA will not pursue administrative enforcement or referrals to other agencies based on its determination with respect to the certification concerning necessity of the loan request. SBA’s determination concerning the certification regarding the necessity of the loan request will not affect SBA’s loan guarantee.21

Click HERE for the full list of questions and answers from the Treasury Department on PPP loans.