Some long-awaited and much-needed relief for U.S. businesses is on the way as Congress has approved — and the president has signed — legislation for a second round of stimulus to aid those impacted by the COVID-19 pandemic. The bulk of the $900 billion stimulus package is geared to support businesses, helping them weather the economic storm through a mixture of programs and tax breaks.
Here are six things you should know about this newest deal:
- Second round of PPP: The Paycheck Protection Program is back with an infusion of $284 billion to support businesses, allowing those who fit the qualifying criteria and have already received a loan to apply for a second round of funding.
- A simplified forgiveness process: Per the new stimulus package, a new, simpler loan forgiveness application will be created by the SBA within the next month for loans of $150,000 or less. Businesses can have their loan forgiven by signing a one-page document that discloses the number of employees retained through the funding, the estimated amount of the loan spent on payroll costs and the total loan amount.
- Additional financial aid through the SBA: There is $20 billion included for Economic Injury Disaster Loan (EIDL) grants to support businesses in low-income communities, as well as $3.5 billion for continued SBA debt-relief payments and $2 billion for enhancements to SBA lending. This deal also features $15 billion in dedicated funding for live venues, independent movie theaters and cultural institutions.
- More expenses are now deductible: Reversing the IRS’s previous position, the stimulus bill offers an important fix to the existing deductibility restrictions for expenses. Now, all business expenses paid for with proceeds from PPP loans are tax-deductible.
- Expansion of eligibility: Small 501(c)(6) organizations, like chambers of commerce or economic development organizations, that have fewer than 150 employees can now seek PPP funding.
- Credits and deductions: Included in the bill is an expansion of the business meals deduction, enabling businesses to fully deduct meal expenses from their federal taxes. Additionally, the Employee Retention Tax Credit was extended and expanded, giving businesses an additional incentive to keep people on their payrolls.
The plan also includes one-time direct payments for Americans who earn up to $75,000 a year ($150,000 a year for couples), offering $600 for each family member, meaning a qualifying family of four would be able to receive $2,400. It also extends existing pandemic unemployment insurance programs for 13 weeks, expanding federal benefits by an additional $300.
Since the beginning of the COVID-19 pandemic, Padgett and its network of accountants, CPAs and tax professionals have worked to assist businesses in navigating the changing environment of economic-assistance programs. We have worked with more than 1,000 businesses to secure more than $58 million in PPP funding, and we remain engaged in providing support to manage the loan-forgiveness process.
Let our trusted team help your business chart a course to take advantage of the various types of assistance being offered and reach out today to an office near you.