CERTS recap and updates: Treasury expects portal open by end of May
by Ken Presley
After participating in a couple of conference calls with U.S Treasury, some updates and review are warranted.
Apparently, Treasury staff appear to be making timely progress, so barring any unforeseen circumstances they anticipate having the portal open and ready to receive (not yet released) completed applications by the end of May.
Later this week, Treasury will post a link where operators can request email updates and announcements. Click here to link to the Treasury “CERTS” page.
As previously mentioned in last week’s UMA Town Hall, the application period will be four weeks long. Applicants will be able to check the status of their submitted application by logging into the portal, which will display various codes indicating the progress of the application in the review process. Treasury is advising that their officials will not respond to emails or calls from applicants or any third parties seeking information on Treasury’s deliberation over an application.
Treasury staff advises they have anticipated the deluge of submissions and concluded their system should handle the initial rush. They do not anticipate delays due to a crashed website.
Successful applicants will be notified by email as soon as they are determined to be eligible for a grant. However, Treasury will not advise the amount of any grant until after the four-week application period closes. To ensure the funds allocation to industries is evidence-based and equitable, Treasury will perform the allocation to industries after the grant application period closes so that actual data from the known pool of all eligible applicants across industries is the basis for the allocation.
What is a non-competitive grant?
As previously mentioned in UMA correspondence and Town Halls, CERTS grants are formula grants and are non-competitive. Typically, “competitive” grants require a narrative as applicants compete for funds based on their need, how they will apply funds if awarded, and how their award will meet the goals set out by Congress. Generally, in a formula grant, all eligible companies that submit a complete application are approved. Treasury assures that all eligible applicants will be offered a grant that is a share of the $2 billion appropriated for the CERTS program.
Treasury will publish the formula and other considerations for calculating individual grant awards as soon as possible after the application deadline. An applicant’s lost revenues from 2019 to 2020 will be the primary factor in the grant-sizing formula used to determine the grant amount offered to an individual approved applicant.
To ensure access by small businesses in accordance with the CERTS Act, the formula may include a minimum grant size to ensure all approved applicants receive a basic amount and/or a maximum grant size to provide for a deeper distribution of available funds to all approved applicants.
Treasury staff intends to release a “Frequently Asked Questions” (FAQ) to be posted on the CERTS/Treasury website.
Eligible Use of Funds
Subject to other rules and conditions in the CERTS statute and grant agreement, grantees may use grant funds for operating expenses, including but not limited to:
- Payment of payroll costs (see the definition of “payroll costs” above) and compensation of returning employees for lost pay and benefits during the COVID-19 pandemic.
- The acquisition of services, personal protective equipment, and other measures needed to protect workers and customers from COVID–19 operations.
- Maintenance of existing capital equipment and facilities, such as rent, leases, insurance, and interest on regularly scheduled debt service (Example: funds may be applied to coach payments interest only – not principal).
Ineligible Use of Funds
- Grantees may not use grant funds for:
- Any payment or prepayment of principal on a debt obligation, except for any principal on a debt obligation incurred during the COVID-19 pandemic for the purpose of maintaining the payment of payroll costs during the COVID-19 pandemic.
- Capital expenditures. (Example: funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.)
- Delinquent taxes.
- Any compensation of an individual employee in excess of an annualized salary rate of
- $100,000, i.e., any compensation in excess of $8,333 per month, $3,846 per bi-weekly period, $1,923 per week, etc.
- Any tax imposed or withheld under chapters 21 (Federal Insurance Contributions Act), 22 (Railroad Retirement Act Tax), or 24 (Collection of Income Tax at Source on Wages) of the Internal Revenue Code of 1986.
- Any compensation of an employee whose principal place of residence is outside the United States.
- Any qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (26 U.S.C. § 3111 note, Public Law 116–127)
- Any qualified family leave wages for which a credit is allowed under section 7003 of that Act (26 U.S.C. § 3111 note, Public Law 116–127).
- Any bonus, raise in excess of inflation, or other form of additional employee compensation.
- Any expense for which funding or financing has been awarded, sub-awarded, or otherwise provided through another Federal program.
Notifications and Amount of Grants
Eligible applicants will be notified of the grant amount for which they are eligible and will be sent a set of documents to execute. Applicants will be required to certify under penalty of perjury that (1) the information and certifications provided in the application and its attachments are true and correct, and (2) the applicant has documentation to support amounts and figures entered into the application form. Anyone who knowingly submits a false claim or makes a false statement is subject to criminal and/or civil penalties, including confinement for up to 5 years, fines, and civil penalties. Upon receipt of completed documents, Treasury will deposit funds electronically.
Finally, Federal grants are considered taxable income and will need to be reported as such. Check with your state revenue office to determine you obligation to your state(s). As always, UMA consistently recommends the inclusion of your accountant and/or CPA regarding the CERTS grant.
In summary, the guidelines provide the majority of the requirements you will need to submit as well as conditions. You still have time to coordinate with your accountant and make sure you are prepared.
Successful applicants will be notified by email as soon as they are determined to be eligible for a grant. However, Treasury will not advise the amount of any grant until after the four-week application period closes. To ensure the funds allocation to industries is evidence-based and equitable, Treasury will perform the allocation to industries after the grant application period closes so that actual data from the known pool of all eligible applicants across industries is the basis for the allocation.
What is a non-competitive grant?
As previously mentioned in UMA correspondence and Town Halls, CERTS grants are formula grants and are non-competitive. Typically, “competitive” grants require a narrative as applicants compete for funds based on their need, how they will apply funds if awarded, and how their award will meet the goals set out by Congress. Generally, in a formula grant, all eligible companies that submit a complete application are approved. Treasury assures that all eligible applicants will be offered a grant that is a share of the $2 billion appropriated for the CERTS program.
Treasury will publish the formula and other considerations for calculating individual grant awards as soon as possible after the application deadline. An applicant’s lost revenues from 2019 to 2020 will be the primary factor in the grant-sizing formula used to determine the grant amount offered to an individual approved applicant.
To ensure access by small businesses in accordance with the CERTS Act, the formula may include a minimum grant size to ensure all approved applicants receive a basic amount and/or a maximum grant size to provide for a deeper distribution of available funds to all approved applicants.
Treasury staff intend to release a “Frequently Asked Questions” (FAQ) to be posted on the CERTS/Treasury website.
Eligible Use of Funds
Subject to other rules and conditions in the CERTS statute and grant agreement, grantees may use grant funds for operating expenses, including but not limited to:
· Payment of payroll costs (see the definition of “payroll costs” above) and compensation of returning employees for lost pay and benefits during the COVID-19 pandemic.
· The acquisition of services, personal protective equipment, and other measures needed to protect workers and customers from COVID–19 operations.
· Maintenance of existing capital equipment and facilities, such as rent, leases, insurance, and interest on regularly scheduled debt service (Example: funds may be applied to coach payments interest only – not principal).
Ineligible Use of Funds
Grantees may not use grant funds for:
· Any payment or prepayment of principal on a debt obligation, except for any principal on a debt obligation incurred during the COVID-19 pandemic for the purpose of maintaining the payment of payroll costs during the COVID-19 pandemic.
· Capital expenditures. (Example: funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.)
· Delinquent taxes.
· Any compensation of an individual employee in excess of an annualized salary rate of
· $100,000, i.e., any compensation in excess of $8,333 per month, $3,846 per bi-weekly period, $1,923 per week, etc.
· Any tax imposed or withheld under chapters 21 (Federal Insurance Contributions Act), 22 (Railroad Retirement Act Tax), or 24 (Collection of Income Tax at Source on Wages) of the Internal Revenue Code of 1986.
· Any compensation of an employee whose principal place of residence is outside the United States.
· Any qualified sick leave wages for which a credit is allowed under section 7001 of the Families First Coronavirus Response Act (26 U.S.C. § 3111 note, Public Law 116–127)
· Any qualified family leave wages for which a credit is allowed under section 7003 of that Act (26 U.S.C. § 3111 note, Public Law 116–127).
· Any bonus, raise in excess of inflation, or other form of additional employee compensation.
· Any expense for which funding or financing has been awarded, sub-awarded, or otherwise provided through another Federal program.
Notifications and Amount of Grants
Eligible applicants will be notified of the grant amount for which they are eligible and will be sent a set of documents to execute. Applicants will be required to certify under penalty of perjury that (1) the information and certifications provided in the application and its attachments are true and correct, and (2) the applicant has documentation to support amounts and figures entered into the application form. Anyone who knowingly submits a false claim or makes a false statement is subject to criminal and/or civil penalties, including confinement for up to 5 years, fines, and civil penalties. Upon receipt of completed documents, Treasury will deposit funds electronically.
Finally, Federal grants are considered taxable income and will need to be reported as such. Check with your state revenue office to determine you obligation to your state(s). As always, UMA consistently recommends the inclusion of your accountant and/or CPA regarding the CERTS grant.
In summary, the guidelines provide the majority of the requirements you will need to submit as well as conditions. You still have time to coordinate with your accountant and make sure you are prepared.