After some last-minute back and forth with Congress, President Trump has signed H.R. 133, the Coronavirus Relief and Omnibus Agreement, into law. At 5,593 pages, we’re still sifting through it, but we do have a handle on the new edition of the Paycheck Protection Program (PPP) and how it will affect small businesses.
Here are some of the highlights:
PPP2: Will You Qualify if You Already Received PPP Funds?
Yes. You can apply for PPP2 even if you received PPP funds previously, provided you qualify.
That means your business must:
- Have 300 or fewer employees.
- Demonstrate 25% gross receipts decline in any calendar quarter of 2020 compared to the same quarter in 2019.
Funds could go quickly, so if you are interested, we recommend applying as soon as it opens.
What if You Didn’t Apply for a PPP1 Loan?
If you did not apply for a PPP loan the first time, then those initial requirements apply to you, rather than the revised ones from this second bill. That means, for example, that your business only needs to have 500 or fewer employees.
The cap on your loan is $2 million. That’s smaller than the first loan’s cap of $10 million. This time, Congress aimed at funding smaller businesses that are truly in dire need of help, pushing back on some of the criticism that loans were too-quickly given to larger, successful companies that didn’t need the assistance.
Another difference: the range of businesses and organizations has expanded and now includes 501(c)(6) nonprofit organizations and housing cooperatives.
How H.R. 133 Benefits Businesses
Here are the main benefits for businesses under the new bill:
- Tax deductions that cover all business expenses paid for with the proceeds of PPP loans and EIDL advance (if you followed the rules)
- Extended and expanded Employee Retention Credit
- Tax credits to support employers offering paid sick leave
- 100% deduction for business meal expenses for 2021 and 2022
For PPP Loans under $150k, your forgiveness application will be just one page. Look for information from the SBA to your lender in the coming weeks.
As in the first round of PPP Loans, there will be a few requirements for the application. You will need to:
- Report the number of employees the loan is allowing you to retain;
- Estimate how much of the loan will be spent on payroll; and
- State total amount of the loan.
If your loan is above $150k, the application will be more complicated. Still, in most situations, it’s going to be beneficial for your business to go through the steps to get a PPP Loan.
How Long Will It Take for PPP2 to Dispense Loans?
Now that the bill has been signed into law, you can expect the PPP to begin quickly — though maybe not as quickly as it did the first time. The first PPP loan bill was signed on March 27th, and the program started only a week later, leading to a haphazard implementation process.
To avoid the chaos of the first roll-out, authorities will likely take more time to dispense payments. It’s reasonable to expect the first checks to mail at some point in late January or February.
Did You Have Trouble Getting a PPP Loan the First Time? It Should Be Easier Now
In the last round back in March, there was criticism that smaller businesses that did not have a working relationship with a bank were unable to secure a loan — banks were unable or unwilling to go out on a limb for unknown entities.
Congress has implemented some changes this time around to avoid that occurring again. $15 billion is earmarked for smaller, community-focused lenders that are more likely to loan to first-time borrowers. There is also money set aside for particularly small businesses — those with 10 or fewer employees that are first- or second-time PPP borrowers.
Here are Some of the Other Provisions of the Bill:
For Individuals:
This is the part of the bill that’s been the main source of controversy lately. Individual provisions include stimulus checks of up to $600 per adult and child, with phase-outs for high-income earners, starting at $75,000 a year.
Some other aspects of the bill that apply to individuals:
- Enhanced unemployment benefits through March of 2021, with $300 per week
- Rental assistance with the CDC eviction moratorium extended until Jan 31, 2021
- Extension of student loan forbearance from Jan 31, 2021 through April 1, 2021
- Improved Earned Income Tax Credit & Child Tax Credit that allows a look back to 2019 income
Other Extensions:
- Mortgage debt forgiveness exclusion from income extended five years
- Extensions of the New Markets Credit (NMTC) Program and the Work Opportunity Tax Credit (WOTC)
- Extended clean energy tax credit
If your business needs some help maneuvering the new stimulus bill, call me at (682) 224-3243 or fill out a quick form on our Contact Us page.