This summary includes:

  • Small Business Administration (SBA) Paycheck Protection Program (PPP) Updates and Strategies
  • Tax Planning Observations:
    • General Tax Planning – be strategic in 2021 as rates may be higher in 2022
    • Don’t forget the Research and Development Tax Credit
    • March Applicable Federal Rates (AFR)
  • Retirement Planning: 401(k)/403(b) Spotlight

SBA PPP Updates and Strategies:

  • The SBA is in the process of granting PPP loans from the additional $284 billion allocated in the December 27, 2020 H.R. 133 for Second Draw Borrowers.
  • On January 19 the SBA released new guidelines through FAQs and updated forms to implement the December 27 H.R. 133 required changes for processing Loan Forgiveness requests. One of these forms is the new 1-page Form 3508S for Forgiveness of Paycheck Protection Loans for amounts up to $150,000 when there were no reductions to salary or wages. A number of banks have been updating their on-line application forgiveness systems with varying rapidity.
  • Starting February 24, the Administration initiated a 2-week exclusive period where only PPP loan applications from applicants having fewer than 20 employees will be accepted.
  • SBA has relaxed the prior prohibitions against applicants: (1) who had prior non-fraud felony convictions; (2) who had federal student loan delinquency and defaults; or (3) who were non-citizens but were lawful U.S. residents[1].
  • The latest First Draw Borrower Application is:
  • The latest Second Draw Borrower Application is:

The SBA PPP program requirements are constantly changing so the borrower should periodically check to see whether there is new guidance before submitting their PPP Loan Forgiveness Application to their Lender.

Tax Planning Observations:

  • January 20 bought a new Administration to power and now Vice President Harris has the power to cast tie-breaking votes in the Senate. This change resulted in a greater likelihood that significant additional stimulus will be authorized and distributed. Not only does this have profound implications for asset pricing, including investments, it will also significantly impact future tax policy as the magnitude of current deficit spending is unsustainable.
  • Federal fiscal stimulus for the 9 months ending December 27, 2020 totals $3.6 trillion[2]. On January 20, 2021, President Biden announced the American Rescue Plan. The House of Representatives, in turn, passed The American Rescue Plan Act of 2021[3], and it is expected to pass in the Senate and be signed into law by the Administration by mid-March.  The total, $5.5 trillion, represents 5.5 times the U.S. deficit in 1944 during peak World War II spending after adjusting for inflation, and 26% of the U.S. total GDP.  Another trillion-dollar infrastructure bill is starting to be discussed.  A significant portion of this spending will need to be paid for with higher taxes.
  • The new Administration’s tax policy platform calls for increasing corporate and individual taxes, lowering the gift and estate exemption, and looking at the gift and estate tax rates. These changes can be applied retroactively back to the start of the year.  However, in light of the current situation, it would not be surprising to see that any major tax policy changes would be pushed off until 2022.  Treasury Secretary Yellen, in a recent CNBC interview, indicated that parts of the $1.9 trillion bill would be paid for with taxes proposed later this year and phased in over time[4].
  • It would seem unlikely the U.S. will see tax rates lower than they are today for many years to come. Accordingly, you should consider the timing of when you will trigger income, especially long-term capital gains in 2021, from activities such as the sale of all or a part of your business, investment properties, or other long-term assets such as stocks. Currently, the 15% Long Term Capital Gains tax rate for Married Filing Jointly is for taxable incomes up to $501,600 for 2021, and 20% above that.  Candidate Biden’s comparison tax platform called for long-term capital gains to be taxed at ordinary income tax rates (39.6%) for incomes above $1.0 million[5].  So, if a business owner is contemplating a near-term owner transition exit (see our Preparing to Transition Your Business, December 1, 2020 article[6]), they may want to consider triggering that tax consequence in 2021 rather than 2022 to maximize after-tax proceeds for retirement. Your BLBB Financial Advisor can assist you in your analysis and work with you to update your financial plan to model this scenario.
  • There is a Federal Research and Development (R&D) tax credit which can provide entrepreneurs with a 20% tax credit to the increase resulting from qualified research expenses over the amount in a base period. What qualifies is surprisingly broad and can include both “product technology” and “process technology”.  This tax credit can also be taken by Partnerships and Subchapter S corporations.  The details are explained on IRS Form 6765 and the Instructions to Form 6765.  The IRS explains “This research must be undertaken for discovering information that is technological in nature, and its application must be intended for use in developing a new or improved business component of the taxpayer. In addition, substantially all of the activities of the research must be elements of a process of experimentation relating to a new or improved function, performance, reliability, or quality[7].”  If you would like to discuss this further, please coordinate a call with me through your BLBB Advisor.
  • The IRS, as of February 24, 2021 stated they would NOT be extending the individual tax return due date beyond April 15 for taxpayers[8]; except taxpayers who live in Texas are granted until June 15[9]. Generally, all taxpayers can get an automatic 6-month extension until October 15 by timely filing Form 4868 (simple 1 page form).
  • The March IRS Applicable Federal Rate (AFR) rates are: Short Term (<3 years) 0.11%; Mid-term (3 – 9 years) 0.62%; and Long-term (>9 years) 1.62%[10]. These rates have increased significantly from February’s rates and will likely increase further given the increase in inflation expectations as demonstrated in the recent surge of the 10-year U.S. Treasury Bond rate.

Retirement Plan (401(k)/403(b)) Spotlight

  • There are many reasons for employers to offer robust retirement plans to their employees. It is well documented that a strong retirement plan assists with staff retention, competitive hiring, and employee morale.  Additionally, the tax-advantaged attributes of these plans will likely become more important as tax rates increase because of the power of pre-tax compounding (you earn a return on money you otherwise would have paid in tax). Also, if you are able to trigger taxable distributions, like Required Minimum Distributions (RMDs) when you are in a lower marginal federal tax rate after you are retired, and employment income ends. Some may also benefit by being domiciled in a state which does not tax RMDs (i.e., Florida or Pennsylvania).
  • A reminder to Plan Sponsors: Cybercrime is on the rise and employee retirement plan assets are increasingly coming under attack.  It is advisable to send regular reminders to your plan participants to set up on-line accounts protected with a strong password that is not related to other passwords they might use.  If possible, they should also use Dual Factor Authentication via their mobile phone.  Additionally, it is advisable to instruct your plan’s Third Party Administrator to terminate all email invitations if not activated within a short interval such as 72 hours. This will help guard against fraudulently initiated withdrawals and loans from employee retirement plan participant’s accounts.

BLBB has a robust retirement planning group with decades of experience in advisory, headed by Ed Barnes, which can help you evaluate your retirement plan objectives, assist with plan design; provide low cost, wide access investment platform alternatives; and review your current program and provide a no-cost written assessment with recommendations.

Future BLBB Entrepreneurial Management quarterly publications will continue to highlight select observations and strategies.

Additional resources:

BLBB does not provide tax advice nor practice law.  Please see your licensed tax or legal professional who can advise you based on your particular facts and circumstances


Doug Huntley is a Principal and Financial Advisor with BLB&B Advisors, LLC and also the Chief Operating Officer of BLBB Holdings, LLC. He is a graduate of The Wharton School of Business where he received an MBA with a focus on Finance and Strategic Planning. Doug is also magna cum laude, graduate of Bucknell University, where he received a BSBA in accounting.




[2] CARES Acts: $2.2 Trillion on 3/27/20; $0.5 Trillion on 4/24/20; and $0.9 Trillion on 12/27/20


[4] Treasury Secretary Yellen, CNBC Closing Bell Interview 2/17/21 with Sarah Eisen “well it would be a package that would probably be proposed later this year and would involve spending and investment over a number of years in infrastructure, training and education, things that last many years, and tax increases to at least pay for a portion of that would be phased in over time.”

[5] Details and Analysis of President Joe Biden’s Tax Plan,







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