Finding Funding to Leverage Opportunities and Manage Complexity in the New Year

Last year brought new challenges for transloading, and regardless of your business sector, you are likely looking to strategize against pain points and make the most of opportunities in 2021. According to the Journal of Commerce, we can expect to see many of the same issues with labor shortages in all sectors and higher shipping volumes exacerbating congestion at intermodal facilities. Whether you are looking to offset the effects of increasing costs, recoup losses, or expand your infrastructure, you may be interested in taking advantage of renewed federal loan and grant options.

Stimulus Updates to PPP loans and EIDL Grants

The new stimulus bill, formally known as the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, added some new benefits and regulations to the CARES Act that you should be aware of. Primarily, this act will affect your loan and grant options, as well as how much you’ll pay in taxes for the year 2020. Applications for first time PPP loans are still open. 

If you have already received a PPP loan, you may qualify for a second draw PPP loan. Eligibility for this loan requires that you have used or plan to use all funds from the first PPP loan, have less than 300 employees, and have at least a 25% reduction in gross receipts in one or more quarters of 2020 compared with the same quarters in 2019. If you received a PPP loan and did not receive the full amount that you qualified for, you may request the rest of those funds. 

For loans less than $150,000, the act will produce a new, simpler application of forgiveness in addition to the current 3508EZ and 3508S simple applications.

Additionally, this act extended the funding for EIDL grants through the Small Business Association. To qualify, you must meet all previously established requirements; you must also have less than 300 employees, be located in a low-income community, and have seen economic loss greater than 30% due to COVID-19. 

The Act also states that PPP loans and EIDL grants will not be taxed, and you may deduct the funds used from your 2020 taxes. Also included in the act is an extension of deferred repayment of payroll for social security taxes and railroad retirement taxes to Dec 31, 2021.

Alternative Loan Options from the SBA

If you plan on utilizing a loan or grant to recoup losses or expand your business, it’s important to look into all of your options. According to the Philadelphia Inquirer, the new coronavirus relief act also replenished funding for Sec7(a) loans and 504 Microloans through the SBA.

An Sec7(a) loan can be used for working capital, equipment, inventory, and business acquisition. You can borrow up to $5,000,000 at fixed or variable interest rates if you’re a for-profit business with less than 500 employees, less than $7.5 million in average annual receipts, and are not currently delinquent on any government debt. Maturities can vary from seven to twenty five years.

The 504 Microloan program might be right for your business if you are looking to purchase commercial real estate, existing buildings, and equipment to grow your business. The microloan has a limit of $5 million with fixed interest rates and a maturity of ten to twenty years. 

Both of these loans are eligible for three to six months of forgiveness, even if you already have one! For current borrowers, you may receive three months of forgiveness of principal and interest payments. If you start a new Sec7(a) loan or 504 Microloan before September 20th of this year, you can have up to six months of your principal and interest payments forgiven. Both forgiveness plans are capped at $9,000 a month. The best part of these loans are that you do not need to prove that your business was negatively impacted by COVID-19, and you can receive them even if you have previously received a PPP loan.

 You can learn more about these options from the SBA’s website. While we might see volumes move towards normalcy this year, you may consider using a loan to stay ahead.