(Update: Monday, December 28, 2020)
On Sunday night, President Trump signed legislation for $900 billion in coronavirus economic aid and $1.4 trillion in government spending and preventing a government shutdown. Here are some highlights related to small businesses that are in the stimulus plan.
The “Second draw” PPP loans put more emphasis on very small businesses, including those that have the following:
- 300 or fewer employees AND
- Had at least a 25% reduction in gross receipts in one or more quarters of 2020 when compared to comparable quarters of the year before (with some caveats for seasonal and newer businesses).
What your business may be able to access:
There will be a new, simplified application for loans of $150,000 or less, including loans that have already been made but not forgiven.
As with any issue related to taxes or money, it is critical to get advice from a trusted tax, accounting, banking, or other professional before making financial decisions.
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- This is breaking news. The legislation must be signed by the President to become law. Most recent update: December 22, 2020. 5:04 PM
- According to Politico, Sen. Ben Cardin of Maryland, the top Democrat on the Senate Small Business Committee, said he believed the window for so-called Paycheck Protection Program loans should reopen within a matter of days “because that process is understood.”
- The timeline offered by the senior lawmaker indicated that the SBA and the Treasury Department face pressure to move quickly during the upcoming holiday week to revive the PPP, which was a major piece of the Covid-19 relief bill Congress passed this week.
- Recommended reading at the Journal of Accountancy:
“The U.S. Senate and House of Representatives overwhelmingly passed a $900 billion COVID-19 relief bill Monday night that provides $600 stimulus payments to individuals, adds $300 to extended weekly unemployment benefits, and provides more than $300 billion in aid for small businesses”
- Lawmakers have agreed on a $900 billion Covid stimulus package (December 21, 2020).
- The legislation sets aside $284 billion towards forgivable small-business loans under a new iteration of the Paycheck Protection Program.
- Small businesses that took a PPP loan and saw their revenues fall by 25% will be able to obtain a second loan.
- Congress will also allow PPP borrowers to take tax deductions for covered business expenses.
- The legislation is complicated and you should always check with your accountant, financial advisor before making any assumption.
Here are more provisions in the legislation related to small businesses and the pandemic.
- Small businesses may receive a second PPP loan if they have fewer than 300 employees and can prove that their revenue has fallen by 25%.
- $284 billion will be targeted to forgivable loans through the Paycheck Protection Program.
- Generally, borrowers are eligible for PPP loan forgiveness if they apply at least 60% of the proceeds to payroll.
- The maximum amount for a second draw will be $2 million.
- The legislation also creates a simplified forgiveness application for businesses that took PPP loans under $150,000.
- Firms that received a cash advance through the Economic Injury Disaster Loan program also will no longer have to deduct the advance from their PPP loan forgiveness amount.
Again, the legislation is complicated and you should always check with your accountant or trusted financial advisor before making any assumption or actions. We will continue to update this page.