What Small Business Should Know About the Next Stimulus Package

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While Congress and the President debate over the recent setbacks, there are new provisions included in the 900 billion stimulus relief bill that could help small businesses.

One big win for small businesses is that this new package will restart the Paycheck Protection Program through March 31st which helped preserve jobs and kept struggling business owners keep their doors open these last few months.

The relief bill includes $284 billion in order to restart PPP.

Apart from this new legislation expenses paid with the Paycheck Protection Program funds are now deductible.

“An additional bonus is that the Economic Injury Disaster Loan (EIDL) advances are also received tax-free and you’re allowed to deduct the expenses,” states Forbes.

The bill will make it possible for more business owners to get a second forgivable loan while also relaxing the requirements to have those loans forgiven.

This will allow more business owners to access those untapped funds of $138 billion that was not spent in the first PPP. The program prevented them from getting a second helping.

As well more minority-owned businesses and restaurants get the chance to apply.

“According to outlines of the bill circulating among congressional officials on Monday, hotels and food-service businesses would be eligible for bigger loans this time.”

The applications will now be no more than one page and should be available within 24 hours after this bill gets signed by the Senate, the House, and President Trump.

“Businesses that got a PPP loan when the program first went into effect now may apply for a “second draw,” so long as they’re not a public company, don’t employ more than 300 people, have used or willfully use their first PPP loan, and can show at least a 25% drop in gross receipts in the first, second or third quarters of this year compared to the same quarter in 2019.”

Under the new bill, the rules to apply are now simplified as well for those loans under $150k.

You will need to submit the number of employees the eligible recipient was able to retain, the amount of your loan that you spent on eligible payroll costs, and “an attestation that you accurately provided information complied with the applicable requirements and plan to retain records for the required period.”

The new bill also expanded on the types of expenses that are eligible for forgiveness.

The new expenses include operations expenses such as software that facilitates business operations, service delivery, and accounting software.

Forbes stated, “The simplified process will apply to more than 85% of PPP loans, that is, to the some 4.5 million out of 5.2 million total that borrowed less than $150,000.”

It now covers property damage costs due to the vandalism that occurred this year and it covers supplier costs.

It also includes worker protection expenses to comply with CDC guidelines.

According to CNN, “The latest Covid relief package clarifies that if the loan is forgiven, it will be treated as tax-free to the businesses.”

Under the new relief bill, it also allows business owners to still deduct those payroll and operations expenses on their tax returns even when if you used the PPP funds to pay for those expenses.

This is a huge source of relief for small business owners who have had to deal with the ongoing lockdowns that lasted longer than anyone expected.

The next stimulus package has yet to be signed into law.

Sources:

https://www.forbes.com/sites/brianthompson1/2020/12/21/what-small-business-owners-need-to-know-about-the-new-stimulus-package/?ss=personalfinance&sh=521c4e4e25c1

https://www.politico.com/news/2020/12/22/cardin-ppp-restart-by-new-years-450140

https://www.cnn.com/2020/12/23/success/covid-relief-bill-small-businesses-ppp-loan/index.html