COVID-19 small business loans

Updated on March 16, 2021

Unprecedented emergency stimulus legislation has provided significant federal funding through the U.S. Small Business Administration (SBA) for loan programs to assist small businesses, independent contractors, and the self-employed coping with the financial impacts of COVID-19. AVMA will update this page as additional information becomes available.

The most recent stimulus package, the American Rescue Plan Act of 2021, provides $15 billion in new funding for the Economic Injury Disaster Loan (EIDL) program for targeted grants to hard-hit underserved small businesses. The legislation also provides $7 billion for expansion of the Paycheck Protection Program (PPP) to additional nonprofit organizations.

On March 3, 2021 the SBA released an updated rule that changed the PPP formula for sole-proprietors and independent contractors based on gross income, rather than net income. This change does not apply retroactively to borrowers who have already received a PPP loan.

There have been significant changes to the original small business loan programs through subsequent legislation and/or updated federal guidance and rules. On January 6, 2021 the SBA released an updated rule to the PPP program, which impacts veterinary small business borrowers.

  • Clarifies that tax deductions are allowed for ordinary business expenses paid for with PPP loans that are forgiven, which reverses a previous IRS ruling: When it created the PPP program, Congress intended for PPP recipients to be able to deduct the payroll costs and otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, even though the loans themselves are tax-free income. Depending on where a veterinarian lives, this means that up to 40% of the amount of a PPP loan stays within the veterinary practice instead of being paid in taxes.
  • Creates a simplified two-page forgiveness application for PPP loans up to $150,000 (Form 3508S). Borrowers are required to maintain employment records for four years and supporting documentation for three years following forgiveness submission. SBA also has been directed to develop a PPP audit plan and report back to Congress.
  • Allows recipients to apply for a second draw of a PPP loan if the business has fewer than 300 employees and had gross receipts during the first, second, or third quarter of 2020 – or, only with respect to an application submitted on or after January 1, 2021, the fourth quarter of 2020 – that demonstrate not less than a 25% reduction from the business's gross receipts during the same quarter in 2019. The maximum amount for a second PPP loan is $2 million. Apply through the PPP second-draw application portal.
  • Expands PPP eligibility to include 501(c)(6) organizations with 300 or fewer employees, subject to restrictions on organizations that lobby federal, state, or local governments. First-time PPP recipients may elect to use 2019 or 2020 as their base period to calculate the maximum loan amount. First-time PPP borrowers, including 501 (c)(6) organizations, can apply through the PPP first-draw application portal.
  • Allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.
  • Expands eligible forgivable expenses to include PPE and facility modifications to comply with health and social distancing guidelines.

The SBA and Treasury Department may release updated information, guidance, and clarifications. Visit the SBA COVID-19 webpage for full details on PPP and the Economic Injury Disaster Loan (EIDL) program.