As we reported last week, the COVID Relief Legislation contains several important provisions for broadcast stations throughout New York. The legislation will extend the PPP program until March 31, 2021. Once again we want to thank Democratic Leader Chuck Schumer for his continued support of local broadcast stations.
The legislation has several key components: 1) Expanded eligibility for local broadcast stations, 2) access to second draw PPP loans and 3) extension of section 1112 of the CARES Act under which the SBA pays principal and interest for SBA loans. The SBA is required to establish rules within 10 days of enactment. We can expect regulations implementing the legislation soon.
The specifics for these programs were reported last week and can be found HERE.
There are some additional PPP provisions relevant to broadcasters:
- To be forgiven, at least 60% of the costs must go to payroll and up to 40% for non-payroll expenses
- PPP loans will cover payments for any period from 8 to 24 weeks from the date of the loan origination
- The law expands the categories that may be covered, hence forgiven, under the program. It can included mortgages, rent and utility payments, operations expenditures, property damage costs, supplier costs and covered worker protection expenditures incurred during the covered period. This includes expenses used for COVID protection for workers. Covered expenses will not include inventory.
- Forgiven PPP loans will not be treated as taxable income
- The refundable Employee Retention Tax Credit has been expanded from January 1 2021 through June 30, 2021. The 100 employee trigger has been increased to 500 and the limit on per employee creditable wages has been increased from $10,000 per quarter to $10,000 per year! Moreover, to be eligible the year over year gross receipts loss has been lowered from 50% to 20%
- There is a simplified loan process for PPP loans of 150,000 or less, including those obtained before passage of the new law. In these cases, the borrower must simply list the number of employees retained thanks to the loan, the total estimated amount of the loan spent on payroll and the total amount of the loan. Borrowers must retain employment records for four years and other records for three years.
- If you keep all your employees, the entirety of the loan, including interest, should be forgiven. Forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease. If you lay off employees, the forgiveness will be reduced by the percentage decrease in the number of employees. If your total payroll expenses on workers making less than $100,000 annually decreases by more than 25%, loan forgiveness will be reduced by the same amount. If you laid off employees between February 15 and April 26, 2020, you can still be forgiven for the full amount of your payroll cost if you rehired your employees by December 31, 2020. If you are unable to rehire those employees or reopen to business in a way that complies with safety standards, more leeway will be provided for loan forgiveness.
- If you host events or own a venue, you may be eligible for a grant under the Shuttered Venue Operators Program. However you cannot receive funds other both the PPP program and the Shuttered Venue Operators Program.
- If you do not use the loan proceeds for covered expenses, you will be assessed a 1% interest rate on payment. The loan will be due in two years but can be paid off earlier with no prepayment penalties or fees. Loans taken out after June 5 may have an extended maturity period of five years
You can only obtain a PPP loan through a lending institution approved by the SBA. We urge you to consult your financial advisor and lending institution, to see if it qualifies.
The find an SBA office near you click HERE.
As with the initial PPP program, you obtain the loans through your local bank. To find an SBA Lender near you click HERE.
To see a text of the legislation click HERE.
NAB has opened a web portal with detailed information about broadcast related SBA information click HERE.
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