Congress opens investigation into BlueVine and Kabbage after reports of PPP fraud

GettyImages james clyburn
Rep. James E. Clyburn, chairman of the Select Subcommittee on the Coronavirus Crisis.

  • Congress is investigating fraudulent loans facilitated by fintech lenders BlueVine and Kabbage.
  • While fintech lenders only processed 15% of total PPP volumes, they’re involved in 75% of fraudulent loans identified by the DOJ.
  • Fintechs boasted fully-automated PPP applications and faster approvals than traditional banks.
  • See more stories on Insider’s business page.

Congress has opened a formal investigation into potentially fraudulent Paycheck Protection Program loans facilitated by online lenders like BlueVine and Kabbage.

The investigation follows reports from Bloomberg and ProPublica that looked into reports of allegedly fraudulent loans approved by lenders like Kabbage.

The House of Representatives’ Select Subcommittee on the Coronavirus Crisis announced the probe on Friday, sending letters to BlueVine and Kabbage.

75% of PPP loans connected to fraud through a DOJ investigation were facilitated by fintech lenders, the committee says in the letter, citing a Bloomberg report. Those fintech lenders processed just 15% of total PPP volumes, it said.

“I am deeply troubled by recent reports alleging that financial technology (FinTech) lenders and their bank partners failed to adequately screen PPP loan applications for fraud,” representative James E. Clyburn, chairman of the Select Subcommittee on the Coronavirus Crisis, said in a statement.

“This failure may have led to millions of dollars in FinTech-facilitated PPP loans being made to fraudulent, non-existent, or otherwise ineligible businesses.”

An investigation by ProPublica found that Kabbage facilitated 378 loans totalling $7 million to businesses that likely don’t exist. Many of these fraudulent applications were tied to farms registered to residential addresses in areas like southern New Jersey and Palm Beach, Florida.

While it was BlueVine and Kabbage’s tech that processed the loan applications, the fintechs themselves are not banks, and therefore have partner banking relationships that support their lending businesses. BlueVine’s partner bank Celtic Bank and Kabbage’s partner Cross River Bank are both part of the subcommittee’s probe.

The probe seeks to determine whether BlueVine, Kabbage, and their partner banks had adequate controls in place to prevent PPP funds from ending up in the wrong hands.

American Express acquired Kabbage in October 2020, though the deal did not include Kabbage’s existing credit portfolio, which included PPP loans. Kabbage’s outstanding loans were transferred to a new entity called K Servicing.

A Kabbage spokesperson told Bloomberg it conducts “rigorous verification checks” that “go well beyond the minimum requirements issued by the SBA.” For its part, BlueVine told Bloomberg it “conducted advanced fraud-prevention techniques” and tried to “safely support” business owners.

Fintech lenders boasted that automation helped underserved small businesses

The rollout of the PPP, an effort to buoy small businesses amid coronavirus pandemic-driven closures, was less than smooth.

As businesses rushed to fill out applications for the forgivable loans, the nation’s largest banks, like JPMorgan Chase and Wells Fargo, prioritized existing customers that had already gone through compliance processes.

That left many small businesses unable to access PPP loans. Ultimately, many turned to fintechs, including BlueVine, Kabbage, PayPal, and Square.

These digital-only lenders boasted automated application processes with very little human intervention required, which meant they were able to get business approved quickly.

But the majority of their PPP applicants were new customers, meaning they hadn’t already gone through the necessary compliance steps, like ‘know your client.’

98% of Kabbage’s PPP borrowers were new clients. And Kabbage says that due to its “commitment to data and technology to drive automation,” more than 75% of its approved loans were processed without human intervention.

Now, Congress wants to know whether these fully-automated processes made fintechs the lenders of choice for fraud rings.

“A Bloomberg report points to multiple instances of fraud that could have been prevented had FinTechs simply conducted web searches for the company name of inactive, nonexistent, or otherwise clearly ineligible applicants,” the House subcommittee said in its letter to BlueVine.

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‘Deely Nuts,’ ‘Beefy King,’ and other fake businesses reportedly got $7 million in COVID-19 PPP loans through one lender

biden burgers
President Joe Biden.

  • Fake firms collected $7 million in COVID-19 small business relief through online lender Kabbage, ProPublica found.
  • Most fake businesses were registered as farms, with names including “Deely Nuts” and “Beefy King.”
  • Kabbage processed 378 loans to fraudulent companies via the Paycheck Protection Program, ProPublica reported.
  • See more stories on Insider’s business page.

Fake businesses received a collective $7 million in federal COVID-19 relief loans last year through online lending platform Kabbage, and most were registered as farms, according to an investigation by ProPublica.

Kabbage processed 378 loans to bogus businesses under the Paycheck Protection Program (PPP) in the scheme’s first round of funding from March to August last year, the investigation found. Non-existent farms claiming to be based in New Jersey, such as “Ritter Wheat Club” and “Deely Nuts,” each received $20,833, the maximum loan available to sole proprietorships, ProPublica reported.

The Coronavirus Aid, Relief, and Economic Security Act (CARES), passed in March 2020, funded the PPP scheme, and was intended to to help struggling businesses keep employees on their payroll and stay afloat during the pandemic.

The investigation also found that “Beefy King,” a fake cattle ranch registered in New Jersey, filed for a $20,567 loan. The money was registered to the address of Joe Mancini, mayor of Long Beach Township, who denied any knowledge of the application.

“There’s no farming here: We’re a sandbar, for Christ’s sake,” Mancini told ProPublica on the phone.

ProPublica checked New Jersey business records for the farms and found that none of them existed. Hundreds of PPP applicants across 28 states didn’t show up in state registration records, and other lenders had nonexistent businesses on their books too, not just Kabbage, ProPublica reported.

The story is part of a wider problem: The Small Business Administration, which connects business owners to lenders, estimated in January that it approved loans for 55,000 potentially ineligible businesses, and that 43,000 received more money than needed for their payrolls.

ProPublica started investigating the loans after a New Jersey resident got in contact, saying his name was attached to a Kabbage loan linked to a “melon farm.”

The lender, which American Express acquired in August last year, processed nearly 300,000 loans in the first round of PPP funding, according to ProPublica.

“At any point in the loan process, if fraudulent activity was suspected or confirmed, it was reported to FinCEN, the SBA’s Office of the Inspector General and other federal investigators, with Kabbage providing its full cooperation,” Kabbage spokesman Paul Bernardini told ProPublica in an emailed statement.

Kabbage did not immediately respond to Insider’s request for comment.

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Dozens of startups raised hundreds of millions to go public with a SPAC or IPO after taking government loans during the pandemic

SPAC popularity in real esate tech world 4x3
Samantha Lee/Insider

  • About 30 startups took government-backed pandemic loans before raising millions in a SPAC deal.
  • Another 16 startups went public with an IPO in the months after they received the loan.
  • IPOs and SPACs took off amid the pandemic, taking hundreds of companies public.
  • See more stories on Insider’s business page.

Dozens of startups took government-backed loans for small businesses during the pandemic and then went public, new data show.

The data, provided to Insider by PitchBook, showed about 30 startups went public with a special purpose acquisition company, better known as a SPAC, in the months after receiving a Paycheck Protection Program loan, a forgivable loan aimed at helping business owners harmed by the pandemic.

Another 16 companies, ranging in valuation from $187 million to $8.5 billion, joined the public markets with an initial public offering after they received the loan.

The Wall Street Journal, which first reported on the data, said the dichotomy of receiving a government-backed loan followed by raising millions with a SPAC or public offering has sparked debate as to whether the companies should pay back the PPP loans, even if they meet the qualifications for forgiveness.

Read more: A 29-year-old crypto billionaire who’s perfected digital-currency arbitrage shares 2 tips for investors looking to get started in trading – and explains why ether is unlikely to surpass bitcoin

Through interviews with executives and analysis of public documents, the Journal found a third of the 15 highest-valued startups that took a PPP loan ahead of a SPAC deal already repaid the money or have said they’ll do so.

The government doled out 5.2 million PPP loans, totaling $782.2 billion as of May. The businesses who got a loan can receive forgiveness if it was used for qualified expenses, like rent or worker pay.

Some companies were scrutinized for taking a PPP loan meant for small business-owners. Shake Shack, for example, received a $10 million loan and later paid it back after people criticized the company for receiving one as program funds dried up, leaving other businesses without any aid.

One CEO told the Journal the $3 million loan was an “invaluable tool” at the time the pandemic hit, and he was happy to repay it after raising $600 million in a SPAC deal. The executive, Scott Mercer, founded Volta Industries Inc., and merged with Tortoise Acquisition Corp II in a deal that valued the electric-vehicle-charging company at $2 billion, Reuters reported.

SPACs took off in a big way during the pandemic. The blank-check companies merge with private businesses and take them public, without the target having to go through an initial public offering. In 2020 alone, SPACs raised a record $73 billion, which was a 462% jump over the previous year.

So far this year, the number of SPAC deals has already beaten that record. But the SPAC boom may be slowing down, Insider reported previously. Regulators have been monitoring the SPAC craze, and in March, the Securities and Exchange Commission warned investors of the risk in SPACs not living up to the hype.

The IPO market also took off during the pandemic, with 430 new companies listing in 2020, which is the most since 2000, according to Dealogic.

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Small businesses created during the pandemic are still creating jobs and helping the economy. So why are they locked out of federal aid?

small business owner bakery
Jorge Sactic is the owner of Chapina Bakery in Langley Park, Maryland.

  • New businesses are crucial to economic recovery, but they are blocked from applying to the Paycheck Protection Program.
  • Congress must support new business creation by extending PPP eligibility to businesses started after February 15, 2020.
  • The current cut-off date is arbitrary and keeps small business from getting the help they urgently need.
  • Lexi Reese is the COO of Gusto.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

When the World Health Organization declared COVID-19 a pandemic on March 11, 2020, Ashlie Ordonez was ten days away from achieving her dream of owning her own business. She’d already sold her family of seven’s dream home and used the money to start The Bare Bar, a salon in Denver. Then, non-essential businesses like Ashlie’s were forced to close during the pandemic, and she’s struggled to keep it afloat – even selling her wedding ring to pay the rent. Because Ashlie started her business after February 15, 2020, she is not eligible for a small business loan through the Paycheck Protection Program (PPP), which went into effect on April 3 of that year.

Entrepreneurs like Ashlie are crucial to our economic recovery. They provide new businesses and new jobs at a time when 22.2 million jobs were lost to the pandemic. Why are they blocked from receiving aid when $52 billion in PPP funds remain unused? The February 15 cut-off has become an arbitrary date keeping businesses from accessing crucial aid. It’s been rumored that the date was put in place to prevent fraud, but the PPP has multiple other fraud protections in place. This one is unnecessary. Time is running out to get aid to the new businesses that need it – the program expires on May 31st. Congress must do the right thing and open the PPP to businesses founded after February 15.

COVID-19 has evolved, and so should aid

The PPP was launched as a temporary, three-month program back when no one knew how long the pandemic would last. It made sense then to prioritize businesses in existence before February 15, but a year later, things have changed. The cut-off date has not only become illogical, it is also keeping small business owners from getting the support they deserve.

Ashley Walker, who started a part-time catering business while working as a speech pathologist in Florida, dreamed of opening a smoothie shop to provide healthy food options in the neighborhood where she grew up – which she describes as a “food desert.” She opened Smoothie Me Please in January. Shut out of loans and ineligible for PPP, Ashley had to get creative to make her dream happen and received funding through her local Community Redevelopment Agency. Access to a PPP loan would help her continue to expand her business and provide a blueprint for other businesses in her community.

With federal aid still left on the table, business owners like Ashley deserve a fair shot at these funds. They are doing their part to keep Americans employed, and should have equal access to aid.

Extending PPP eligibility will benefit women business owners of color

The economic toll of the pandemic has disproportionately impacted women of color. Black women’s employment is still down 9.7% since February of 2020, compared to 5% for white men and 5.4% for white women. Women of color have also received unequal access to aid. Research from Gusto and The National Association of Women Business Owners (NAWBO) shows that nearly half (47%) of women-owned businesses founded during the pandemic are led by women of color. These women were more than twice as likely as their peers to start a business because they were laid off or were worried about their financial situation.

No one should have to risk losing their home

Washington-based Catherine Wright and Anna Rogers were laid off from their jobs providing therapy to children with special needs because of COVID-19. They started North Star Behavioral Consultants to keep the services running so that no child would be left without care, especially while classrooms were closed. Now they employ a staff of 25 therapists. Their business was founded as a direct result of the pandemic, yet the eligibility requirement means they are unable to receive aid. In order to get a loan from the Small Business Administration, Anna had to put up her home as collateral. They estimate it will take them ten years to pay off the loan.

Entrepreneurs like Ashlie, Ashley, Catherine, and Anna have taken the initiative to drive economic recovery for their families and communities. They deserve to have equal access to capital, including federal aid. Congress has extended the PPP deadline from March 31st to May 31st, an important step that will help get aid to those who need it. But now they must work to ensure new business owners aren’t left out. Those who started businesses after February 15th of 2020 must have a fair shot. As Congress turns its attention to infrastructure, small businesses – the infrastructure of our economy – must continue to be prioritized.

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A New York City investment manager has been charged with stealing over $2.4 million through PPP loans

ppp loan application
A page from the PPP loan application that people have to fill out for financial support due to the continuing outbreak of the coronavirus disease (COVID-19) is pictured on a desk in New York U.S., May 7, 2020.

  • New York City prosecutors charged a man with stealing over $2.4 million through PPP loans.
  • The man is accused of applying for five PPP loans and lying about the number of employees he had.
  • Prosecutors alleged he transferred the “vast majority” of the money to personal trading accounts.
  • See more stories on Insider’s business page.

A New York City investment manager was charged Friday with stealing more than $2.4 million from five lending institutions through Payment Protection Program loans, prosecutors said in a statement.

Gregory Blotnick, 33, is accused of applying for five separate PPP loans between April 2020 and August 2020, and lying about the number of employees he had at his companies, Brattle Street Capital LLC and BSC Management LLC.

While the loans were meant to cover payroll costs, prosecutors accused Blotnick of instead transferring a “vast majority” of the money to his personal trading accounts and losing it in the market.

“As alleged, Mr. Blotnick repeatedly took advantage of a system intended to provide lifelines to small businesses and their employees during the height of the COVID-19 pandemic,” Manhattan District Attorney Cyrus Vance said in a statement.

Blotnick has been charged with five counts of second-degree grand larceny, five counts of second-degree criminal possession of stolen property, and one count of first-degree scheme to defraud.

“At a time when nearly 3,000 businesses were forced to close their doors across New York City, Mr. Blotnick diverted millions in vital PPP funds for his own personal gain,” Vance’s statement said.

It’s unclear whether Blotnick has entered a plea. Insider could not immediately locate an attorney for Blotnick, and his Linkedin page appears to have been taken down. Insider also could not immediately locate representatives for Blotnick’s companies.

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The pandemic may have caused 200,000 business closures – fewer than expected

Store closed coronavirus
A store closure in New York.

  • A Fed survey found that 200,000 extra US businesses have permanently closed in the past year.
  • That’s on top of the estimated 600,000 businesses that close in a given year.
  • Small businesses were not hit as hard as expected, which could be because of government aid.
  • See more stories on Insider’s business page.

In recent years, Federal Reserve economists have estimated that 600,000 US businesses have permanently closed each year. But a Fed study released on Thursday found that the pandemic has resulted in an additional 200,000 permanent closures of businesses over prepandemic levels – or about a quarter to a third above normal.

Individual companies account for about two-thirds of the closures, while personal service providers, like hair and nail salons, were the hardest hit, accounting for 100,000 permanent closures between March 2020 and February 2021.

“Business exit implies permanent job destruction, potentially detaching workers from the labor market and limiting the speed of the employment recovery,” the study said.

The study also said that small businesses had lower exit rates than expected from early on in the pandemic, and while the Fed economists did not provide a reason for this in the study, many small businesses have managed to stay afloat with the help of government aid.

The expectations early in the pandemic were dire for small business. For instance, the National Federation of Independent Business found in a July survey that 23% of small businesses expected to be closed within six months unless economic conditions changed.

Government aid may have accounted for some of this upside surprise. Insider reported on March 16 that most small businesses continued to pay their bills during the pandemic through the Paycheck Protection Program, which gives loans to small businesses.

On top of stimulus aid, Biden’s infrastructure plan could also help mitigate the toll the pandemic has had on US businesses. The president proposed a $400 billion investment to strengthen and protect America’s businesses, which would encourage and promote domestic production of goods.

But the aid can only last so long, and The Wall Street Journal reported that businesses that have not yet permanently closed could soon collapse under the burdens of back rent and unpaid loans.

Insider also reported on Friday that the situation remains challenging for businesses that are open – they’re struggling to hire because of a labor shortage caused by a number of things, including unemployment benefits disincentivizing people to work and fear of contracting COVID-19.

Read the original article on Business Insider

Biden signs PPP small-business aid extension into law one day before it was set to expire

Joe Biden
President Joe Biden.

  • Biden signed the PPP Extension Act into law on Tuesday.
  • This bill extends the small business lending program by two months, through May 31.
  • It also allows the Small Business Administration to continue processing applications through the end of June.
  • See more stories on Insider’s business page.

One day before it was set to expire, on Tuesday President Joe Biden signed the Paycheck Protection Program (PPP) extension into law, extending federal aid for small businesses through May 31.

Five days ago, the Senate sent the PPP Extension Act to Biden’s desk, which extends the small-business lending program by two months and permits the Small Business Administration to continue processing loan applications through the end of June. In both the House and the Senate, the bill passed with overwhelming bipartisan support, and Biden declared the law a “bipartisan accomplishment.”

“Without signing this bill today, there are hundreds of thousands of people who would lose their jobs, and small family businesses that might close forever,” Biden said before signing the bill.

Lawmakers lauded the passage of the PPP extension, given that many small business are still suffering financial hits brought on by the pandemic. That’s why Biden included $50 billion in small business aid in his stimulus plan, including $7.25 billion specifically for the PPP.

According to recent SBA data, the PPP has given out 8.2 million small-business loans thus far, totaling $718 billion, helping many small businesses continue paying their bills throughout the pandemic.

Since it was established under the CARES Act in March, though, the PPP’s loan disbursement has come in for criticism. For example, although loans within the program are intended for businesses with 500 or fewer employees, some large companies got them, such as fast-food chain Shake Shack getting $10 million, which it later returned.

Separately, the Office of the Inspector General found the PPP had distributed duplicate loans to over 4,000 borrowers due to problems in the SBA’s controls, which would have to be paid back.

Both Democratic and Republican lawmakers have said the benefits of the PPP outweigh its detriments and are needed to provide pandemic relief to small businesses across the country.

“These loans have saved small businesses throughout our nation,” Sen. Ben Cardin of Maryland said on the Senate floor last week. “They would not be here today but for this program.”

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Most small businesses kept paying their bills during the pandemic. Experts say that can only last so long.

small business owner
Ralph Mercier, owner of Mercier’s Salon, pauses from hanging up snowflakes in the window of his business in downtown Calais, Maine.

  • Government support has helped small businesses pay their bills during the pandemic, a report finds.
  • Aid programs including the PPP and lender forbearance, along with reduced payrolls, have kept businesses afloat.
  • But experts say that while stimulus aid is a start, relief needs to be more targeted in the future.
  • See more stories on Insider’s business page.

The coronavirus recession hit small businesses hard. However, with the help of small business lending programs and government funding, many businesses managed to continue making their payments, with credit in good standing.

A report released on Tuesday from the Urban Institute, a left-leaning think-tank, found that despite significant revenue losses for small businesses in the past year, government support, reduced payrolls, and lender forbearance have helped those businesses continue paying their bills. Using data from businesses in Chicago, Detroit, Houston, New Orleans, New York, San Francisco, Seattle, and Washington, DC, the report found that while debts owed by small businesses have increased slightly since 2020, most have been able to keep up to date on payments.

“Our new evidence shows that the pandemic’s effects have largely not – or at least not yet – translated into dramatically higher delinquencies or defaults among small businesses,” the report said.

Nationwide, past-due payments or debts owed by small businesses have increased from 17.7% in February 2020 to 18.3% in January 2021, and the report said that while some businesses in the eight cities were more affected than others, differences “in business delinquency from city to city outweigh any effects observed since the pandemic.”

How businesses have paid their bills

Womply data found that revenues for small businesses are down 38% from pre-pandemic levels, while JPMorgan Chase reported that revenues are only down 9% from pre-pandemic levels.

Brett Theodos, a senior fellow at the Urban Institute and researcher on the report, said that given the disparate numbers on the revenue data, there isn’t a definitive answer yet on how much revenues are really down, but “there is a revenue hit regardless of what that number is.”

Despite the losses, those businesses have continued to stay afloat with the help of government-provided aid.

The Urban Institute report found that the Paycheck Protection Program – which lawmakers are now pushing to extend past March 31 – has factored into small businesses maintaining a strong credit standing due to the aid provided since the start of the pandemic.

And in President Joe Biden’s $1.9 trillion stimulus plan signed into law on Thursday, $50 billion was set aside for small business aid, including $7.25 billion specifically for the PPP.

In addition, the report said that many businesses have shrunk their costs during the pandemic by cutting payrolls, and they have also benefitted from flexibility granted from creditors and landlords.

“The combined result of these three forces-PPP support, cost reductions, and forbearances-has been a significant growth of cash holding for small businesses, rising by more than 41 percent before tapering modestly after its peak in August 2020,” the report said. “On average, small businesses have also been able to maintain strong credit standing because of these same forces.”

Continued support through policy is needed

While cutting payrolls and making other accommodations have helped small businesses survive in the past year, the report said that doing so is painful for the businesses and will constrain their future growths.

“Small businesses’ abilities to maintain payments on average does not imply that all businesses and owners are doing well,” the report said.

$300 weekly unemployment benefits were extended through September under Biden’s stimulus, and the benefits, along with the additional PPP funds, will help people and businesses get by financially.

Theodos noted issues with the first round of the PPP, during which the businesses who truly needed the aid were not appropriately targeted, and he suggested that when looking toward future aid for small businesses, policies should ensure aid is being equitably distributed.

“Let’s find those businesses that really need to help,” Theodos said. “Let’s support entrepreneurial ecosystems where they’re not well developed, let’s help de-risk loans that really are high risk, let’s overcome the race equity gap that exists and business ownership in this country, and let’s be more intentional around our targeting.”

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WATCH: How small businesses can master their taxes in 2021

Filing taxes might be a bit different for small business owners this year. Many were greatly impacted by months of mandatory closures, lost essential revenue, civil unrest, government loans and grants, and layoffs. 

To find out what all these things mean for your taxes, small business reporter Jennifer Ortakales Dawkins talked with tax expert panelists. They covered how the pandemic, PPP loans, and revenue losses could impact your filings. 

Meet our panelists: 

Robbin Caruso is a partner in the tax department and the co-leader of the National Tax Controversy group of Prager Metis.

Nicole Davis is the founder and principal of Butler-Davis, a tax and accounting firm located outside of Atlanta, GA. 

Rick Lazio is the senior vice president of alliantgroup and a former US representative.

Topics covered: 

At 1:57 we go over basics like who is considered a small business and what the tax filing deadlines are depending on your business license. 

At 14:16 panelists explain what business owners should know about PPP loans and other types of federal aid and how those can affect your taxes. 

At 23:09 we cover how government-mandated closures affect business taxes,  what to do if your business deferred payroll taxes in 2020, and what pandemic-related expenses businesses can claim. 

At 33:00 panelists explain new, existing, and updated tax credits and incentives, including the Employee Retention Credit (ERC) and Research and Development (R&D) credits. 

And at 46:33 we go into a Q&A to respond to viewers’ questions as well as hear a few more tips from our panelists. 

Watch the full webinar above. For more information on filing your taxes as a small business, check out additional coverage below. 

Read the original article on Business Insider

TAXES: Everything small business owners need to know in 2021

Black business owner entrepreneur
  • 2021 will be an important year for small businesses to file their taxes.
  • Tax credits and incentives can be an effective way to offset losses from a difficult year.
  • But very few small businesses take advantage of all the credits available to them.
  • Visit the Business section of Insider for more stories.

2021 will be an important year for small businesses to file their taxes, as many are still reeling from financial losses during the pandemic. But tax credits and deductions can be used to offset some of your costs.

Join us March 2 at 1 PM EST for a webinar on how small businesses can master their taxes. Our panel of tax experts will answer your questions, which you can submit here. Register for the live event here

Getting tax credits and incentives

Business tax credits and incentives can be an effective way to save money or offset losses from a difficult year, but many small businesses don’t take advantage of them because they’re unaware of what’s available to them. The first step to getting them will be finding what your company qualifies for. Then, you’ll need to regularly monitor compliance. 

Some examples of tax credits would be if you provide childcare services for your employees or employ disadvantaged groups, such as the formerly incarcerated, long-term unemployment recipients, veterans, and summer youth.

Read more: This tax season, businesses can get credits for creating jobs, providing employee benefits, and using green energy

6 important tax credits for PPP borrowers

Small businesses can take advantage of both federal aid under the CARES Act and certain tax deductions, including the employee retention tax credit and research and development credits. In addition, the energy-efficient building tax deduction and excise alcohol tax break were made permanent.  

The business meals tax credit, commonly known as the “three-martini lunch,” has been temporarily increased from 50% to a full 100% deduction.

Read more: PPP borrowers can now claim 6 important tax credits – a major change from the original rule 

More about the employee retention credit

The Employee Retention Credit provides up to $14,000 per employee for eligible businesses in 2021. Businesses are eligible to claim this tax credit if they experienced full or partial shutdowns due to government orders during the pandemic or can show a 20% drop in quarterly revenue compared with the same quarter in 2019.

Read more: A business tax credit for keeping employees may be more helpful than a PPP loan – and you could be eligible for both

Read the original article on Business Insider