- Lawmakers agreed on a $900 billion Covid stimulus package over the weekend. The measure sets aside $284 billion towards forgivable small-business loans under the Paycheck Protection Program.
- Small businesses that took a PPP loan and saw their revenues fall by 25% will be able for a second loan.
- Congress will also allow PPP borrowers to take tax deductions for covered business expenses, Treasury Secretary Steven Mnuchin confirmed on CNBC Monday.
Lawmakers extended an additional lifeline to small businesses in the next round of Covid stimulus: more forgivable loans and the ability to take a tax write-off for covered expenses.
Members of Congress reached an accord over a $900 billion rescue package on Sunday.
The measure includes $600 stimulus checks to most adults and each child, as well as a $300 weekly unemployment enhancement.
There are also a series of provisions aimed at ailing small businesses.
In particular, Democrats said they would earmark $284 billion for forgivable loans through the Paycheck Protection Program, according to a joint statement from House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer.
Lawmakers also said that they would expand PPP eligibility to include nonprofits and local newspapers, TV, and radio broadcasters.
The PPP was originally established in the CARES Act this spring. In all, about 5 million firms received some $525 billion in loans through the program.
Generally, borrowers are eligible for PPP loan forgiveness if they apply at least 60% of the proceeds to payroll. Partial loan forgiveness may be available to those who don’t meet this threshold.
Amounts that aren’t wiped must be repaid and are subject to an interest rate of 1%.
A second draw from PPP
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%, according to a summary from the House Small Business Committee.
The maximum amount for a second draw will be $2 million.
Publicly traded companies will be barred from participating, according to Republicans on the House Small Business Committee.
There’s no denying that small businesses are in desperate need of cash to keep their doors open.
Whether those business owners will have an appetite to borrow more money is a different story, said certified financial planner Dan Herron, CPA and principal of Elemental Wealth Advisors in San Luis Obispo, California.
“I don’t think clients want to do it again,” he said. “The continually moving goal posts, the lack of uniformity on forgiveness applications — it’s a pain.”
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