Late last month, the House and Senate negotiated and agreed upon a second stimulus package to provide aid to millions of Americans impacted by the COVID-19 pandemic, all in many different financial circumstances. The new bill (the Bipartisan-Bicameral Omnibus COVID Relief Deal) is extensive and over 5,500 pages long. If you are a small business owner, your business may have been directly impacted by the pandemic, and this new bill outlines new support opportunities.
The initial Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed in late March included a Paycheck Protection Program (PPP). This program was implemented in an effort to help certain businesses, companies, and organizations whose businesses were thwarted by the global pandemic by providing loans for operation expense relief. It also allowed some businesses to continue employing and paying their employees. The bill also provided a second form of aid through a program called the Employee Retention Tax Credit.
This second stimulus bill provides $284 billion for a second round of PPP loans. This funding is available to both first-time participants of the PPP and those businesses that had previously borrowed through the first PPP in March. An additional $20 billion are allocated for businesses in low-income communities.
New modifications have been made to the guidelines of the second PPP. These will be applied to both first and second-time borrowers.
It also expands eligibility for businesses in more industries to accommodate the great financial burden that the pandemic has had on nonprofit organizations and small businesses, specifically the hospitality industry and independent restaurants. Companies that are eligible must have been established prior to February 15, 2020.
New types of companies are now able to apply for a PPP, including:
You participated in the first PPP and are seeking a second PPP
Eligibility: You can apply for a second round of PPP loans up to $2 million if:
Owners in the hospitality industry (bars, restaurants, and hotels)
You participated in the first PPP and you have already applied for loan forgiveness
You participated in the first PPP and are considered a “small borrower” (received less than $150k)
You did not participate in the first PPP and want to participate in the second PPP
The Small Business Administration has 10 days after the bill is signed to provide guidance on logistics for issuing new loans and how to report a 25% drop in business
For more information and to receive an invitation to apply for a PPP loan, please visit: http://go.sbaloangroup.com/PPP
A separate program under the bill, the ERTC encourages businesses to keep employees on the payroll despite financial impacts on their business that would otherwise call for termination of employees.
Taxpaying small business owners may now claim both the ERC and take out a PPP loan.
If you are a business owner, we encourage you to reach out to us to review your particular circumstances and discuss how the new stimulus package applies to you. As always, please contact us with any questions or concerns.
LPL Coronavirus Fiscal Stimulus Package, December 22, 2020
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