After months of partisan haggling and threats of a presidential veto, a new $900 billion Covid-19 relief package has been passed to help bring much-needed aid to American families and small businesses.
The new stimulus bill includes:
-Payments up to $600 (potentially $2,000 pending a vote in the senate) per person for individuals earning up to $75,000 per year and married couples who earn up to $150,000 per year, as well as $600 for each dependent child 16 and under.
-Extended unemployment insurance and $300 in weekly federal enhancement benefits.
-Renewal of eviction ban and rental assistance for those who lost sources of income during the pandemic.
-$284 billion dollars for the Paycheck Protection Program (PPP2) for struggling businesses.
Paycheck Protection Program Details:
-Payroll, rent, covered mortgage interest, and utilities are eligible for loan forgiveness.
-Simplified forgiveness application processes for loans of $150,000 or less.
-The requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount has been repealed.
-Business expenses paid with forgiven PPP loans are tax-deductible.
-For PPP2, maximum loan amount is $2 million, down from $10 million in the CARES Act.
-PPP loans may be entirely forgiven if spent within the proper time period on the proper purposes (primarily payroll).
PPP2 is available to:
First-time PPP borrowers:
First-time borrowers must have 500 employees or fewer.
Businesses must be eligible for other SBA 7(a) loans.
First-time borrowers can be not-for-profits or churches.
Second-time PPP borrowers:
Second-time borrowers must have 300 employees or fewer.
Have used or will use the funds from the first PPP loan in full.
Businesses must be able to show a 25% gross revenue decline from any quarter in 2020 compared to the same quarter in 2019.
For most businesses, borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs for the year prior to the loan or the calendar year, up to $2 million maximum. Borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs for the year prior to the loan or the calendar year, up to the previously mentioned $2 million maximum. The new bill also allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum loan amount available to them.
With some relief finally on the way for the American people, hopefully we can start the new year with optimism and look forward to a better 2021. If you have any questions about the PPP Loan, please let us know!