New PPP and Shuttered Venue Operator Grants faqs, Economic Injury Disaster loan repayment deferred a
- March 15, 2021
New PPP and Shuttered Venue Operator Grants faqs, Economic Injury Disaster loan repayment deferred an extra year.
SVOG FAQs as of 3/12/21 https://www.sba.gov/document/support-shuttered-venue-operators-grants-faq
- *Is an entity that applied for a First Draw or Second Draw PPP loan on or after Dec. 27, 2020, eligible to apply for an SVOG? Yes. While entities originally were prohibited from receiving both forms of SBA assistance, the American Rescue Plan Act, which became law on March 11, 2021, removed this restriction. However, under the law, entities will be ineligible for a PPP loan AFTER they receive an SVOG.
- *How is “talent representative” being defined? A talent representative is an agent or manager for whom no less than 70% of their business operations (as measured with reference to their overall revenues, costs, devotion of time, contracts, and other indicia of business activity) involves the representation or management of two or more artists or entertainers. These operations must involve booking or representing musicians, comedians, actors, or similar performing artists primarily at live events staged in venues or at festivals in exchange for compensation founded on the number of tickets sold or a similar basis.
- *When will SVOG applications open? The SBA is working expeditiously to open SVOG applications in early April. We encourage you to stay up to date by frequently visiting www.sba.gov/svogrant for information.
- *How will the SBA determine the amount of SVOG funding to award an eligible entity that started business operations in January or February 2020 and has no 2019 revenues? Like the manner in which a grant is determined for a firm that did not start in business until partway through 2019, the SBA will award an SVOG applicant that began business operations in January or February 2020 the lesser of the average monthly earned revenue for each full month it was in business in 2020 multiplied by 6 up to a maximum of $10 million.
- *Will the SBA require audited financial statements as part of an SVOG application? No, an audited financial statement is not required to apply for an SVOG award. However, where a forprofit SVOG grantee expends more than $750,000 in Federal funding in one fiscal year it will have the option of either providing a Single Audit Act audit or submitting an audited financial statement for that fiscal year during the audit period.
- *Will an SVOG be disbursed in one lump sum or in multiple payments? If multiple payments are used, what will the time frame be for payout? Depending on the size of the award and other risk factors, some SVOGs will be disbursed in the form of a single lump sum while others will be spread out over multiple payments. In general, most SVOGs under $1 million are deemed to pose a low risk and will be disbursed in one or two installments. Awards for larger amounts are deemed to be a higher risk and will be disbursed in two to four installments. Where payment is made via installments, the schedule of payments will depend upon the grantee’s submission of documentation of an SVOG recipient’s use of the initial fund disbursement and their 2020 federal tax return. The SBA understands not all entities will file a 2020 federal tax return at the same time and will collect documents accordingly. In every case, installment payments will not be made according to a specified calendar or a set amount of time. A grantee’s disbursement will depend on how quickly it can provide the required documentation.
- *Is there a difference between the amount of time an SVOG recipient has to expend award funds and the period of time during which they may incur allowable costs?Yes. While a recipient of an Initial Phase SVOG has one year from the date of its award to expend its grant funds, it can only use those funds to pay allowable items of cost incurred between March 1, 2020, and Dec. 31, 2021. Where an entity receives a Supplemental Phase SVOG, it will have 18 months from the date of its Initial Phase Award to expend its grant funds, but it can only use those funds to pay allowable costs incurred between March 1, 2020 and June 30, 2022.
- *Can SVOG funds be used to make payments on SBA-backed loans? Yes. The Economic Aid Act states SVOG funds may be used for “scheduled payments of interest or principal on any indebtedness or debt instrument.” Given the broad language used by Congress, the SBA will treat payments on SBA-backed loans as an allowable expense under the SVOG program.
- *Are donations / contributions included in gross earned revenue? No. Only earned revenue should be included in calculations of gross earned revenue. Unearned revenue, including donations and other gratuitous contributions, such as foundation grants and individual gifts, should not be included.
- *Will the SBA treat funds derived from sponsorships as earned revenue or gross revenue? Will sponsorship revenue be treated the same for for-profit and non-profit entities? The treatment sponsorship revenue will receive will depend on whether an entity is a for-profit or non-profit entity. Because it represents payment made in exchange for a service (i.e., recognition or advertising), sponsorship payments (such as naming rights) received by for-profit entities will be considered earned revenue. Like the treatment afforded memberships and fundraising events, sponsorship payments received by non-profits will be considered part earned revenue and part gross revenue. In such cases, the sponsorship payment amount a non-profit receives that represents a fair market value for services in exchange (i.e. promotion, free admission, use of facilities) will be deemed earned revenue and the portion of the sponsorship payment that exceeds that amount will be deemed a contribution and thus gross revenue. For example, if a company gives $25,000 to a nonprofit and for that, gets its logo in a program, event admission and screen time on monitors at the venue, then the “market cost” of those items are earned revenue and the remaining is gross revenue.
- *Does the limit on a group of affiliated entities having no more than 5 active SVOG applications pending before the SBA (or receiving more than 5 SVOGs) also apply to entities owned by state or local governments? Yes. No more than five eligible entities owned by the same state or local government may simultaneously apply for or receive SVOGs.
- *Can two affiliated eligible entities both use the employer identification number of their parent to apply for their own SVOG? For example, could a concert hall and a movie theatre owned by the same parent entity each use that parent entity’s EIN to apply? No. Only one SVOG application and award will be allowed per EIN. Additionally, where a parent entity’s EIN is used, it is the parent entity that must meet the statutory definition of an eligible entity rather than its subsidiaries or internal divisions.
PPP FAQs updated https://www.sba.gov/document/support-faq-lenders-borrowers
PPP FAQ 3-12-21
Question: On March 3, 2021, SBA posted Interim Final Rule “Revisions to Loan Amount Calculation and Eligibility” allowing Schedule C filers to use gross income to calculate PPP loan amounts. What options do lenders have to assist Schedule C filers who already submitted a PPP loan application to use gross income to calculate their PPP loan amount?74 Answer: The options available to lenders depend on the status of the PPP loan application.
• If the lender has not submitted a loan guaranty application for the Schedule C applicant who wishes to use gross income to calculate their loan amount, the applicant must submit to the lender SBA Form 2483-C for a First Draw PPP Loan or SBA Form 2483-SD-C for a Second Draw PPP Loan, and the lender then must submit a loan guaranty application to SBA through the Paycheck Protection Platform (Platform) using SBA Form 2484 (Revised 3/21) for a First Draw PPP Loan or SBA Form 2484-SD (Revised 3/21) for a Second Draw PPP Loan.
• If the lender has submitted a loan guaranty application to the Platform and the loan guaranty application has not yet been approved, the lender may withdraw the 74 Question 66 published March 12, 2021. As of March 12, 2021 28 loan guaranty application from the Platform, and resubmit a loan guaranty application after receipt from the applicant of SBA Form 2483-C for a First Draw PPP Loan or SBA Form 2483-SD-C for a Second Draw PPP Loan. The lender must use SBA Form 2484 (Revised 3/21) for a First Draw PPP Loan or SBA Form 2484-SD (Revised 3/21) for a Second Draw PPP Loan when resubmitting the loan guaranty application.
• If SBA has issued a loan number, but the loan has not yet been disbursed, the lender may cancel the loan in E-Tran Servicing and the applicant may apply for a new loan using SBA Form 2483-C for a First Draw PPP Loan or SBA Form 2483-SD-C for a Second Draw PPP Loan.
• If the lender has disbursed the loan but has not filed the related Form 1502 Report reporting disbursement of the loan, the applicant must repay the PPP loan in full, the lender must cancel the loan in E-Tran Servicing, and the applicant may apply for a new loan using SBA Form 2483-C for a First Draw PPP Loan or SBA Form 2483-SD-C for a Second Draw PPP Loan.
• If the lender has disbursed the loan and filed the related Form 1502 Report reporting disbursement of the loan, no changes can be made to the loan amount calculation. Note: Loans must be canceled in E-Tran Servicing (not in the Platform). The Platform may take up to 2 days to reflect the actions in E-Tran Servicing. Lender cannot enter a new loan guaranty application until the Platform recognizes the prior loan’s cancellation.
SBA Extends Deferment Period for all COVID-19 EIDL and Other Disaster Loans until 2022
The U.S. Small Business Administration announced extended deferment periods for all disaster loans, including the COVID-19 Economic Injury Disaster Loan (EIDL) program, until 2022.
• All SBA disaster loans made in calendar year 2020, including COVID-19 EIDL, will have a first payment due date extended from 12-months to 24-months from the date of the note.
• All SBA disaster loans made in calendar year 2021, including COVID-19 EIDL, will have a first payment due date extended from 12-months to 18-months from the date of the note.
Existing SBA disaster loans approved prior to 2020 in regular servicing status as of March 1, 2020, received an automatic deferment of principal and interest payments through December 31, 2020. This initial deferment period was subsequently extended through March 31, 2021. An additional 12-month deferment of principal and interest payments will be automatically granted to these borrowers. Borrowers will resume their regular payment schedule with the payment immediately preceding March 31, 2022, unless the borrower voluntarily continues to make payments while on deferment. It is important to note that the interest will continue to accrue on the outstanding balance of the loan throughout the duration of the deferment.
COVID-19 Economic Injury Disaster loans are offered at very affordable terms, with a 3.75% interest rate for small businesses and 2.75% interest rate for nonprofit organizations, a 30-year maturity. Interest continues to accrue during the deferment period and borrowers may make full or partial payments if they choose.
“The COVID-19 EIDL program has assisted over 3.7 million of small businesses, including non-profit organizations, sole proprietors and independent contractors, from a wide array of industries and business sectors, through this challenging time,” continued Perrillo.
In mid-February 2021, SBA reached a milestone in the success of the COVID-19 EIDL program, by approving over $200 billion in emergency funding in low-interest loans, providing working capital funds to small businesses, non-profits and agricultural businesses to survive the severe impacts of this catastrophic and historic period within the entire United States of America and its territories. SBA continues to approve over $500 million each week for the COVID-19 EIDL program.
Questions on SBA COVID-19 EIDL and disaster loan payments can be answered by email at DisasterCustomerService@sba.gov or by calling SBA’s Customer Service Center at 1-800-659-2955
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