By Alan Wolf, YSN
Update! President Trump has signed the $900 billion COVID stimulus package into law, putting all of the following PPP provisions and tax code changes into effect. Members seeking a first or second forgivable PPP loan are urged to get their applications in to an eligible lender as quickly as possible, as the allotted $284 billion in second-round funding is expected to run out fast.
The new $900 billion COVID stimulus package passed this week by Congress contains a number of measures that will directly affect BrandSource members, including additional Paycheck Protection Program funding (PPP) and relaxed deductibility rules.
While President Trump has threatened to veto the bill in favor of higher stimulus payouts to individuals, the PPP provisions appear likely to remain unchanged. Here’s the breakdown:
First, the measure sets aside $284 billion for a second round of forgivable PPP loans. Eligibility will now be limited to businesses with fewer than 300 employees, down from 500, and loan amounts will be capped at $2 million, down from $10 million. Borrowers may apply for a second PPP loan if they can show that company revenues fell by at least 25 percent.
As with the original round of PPP funding, the loans will be forgiven if at least 60 percent of the proceeds are applied to payroll. Partial forgiveness may also be available, subject to a 1 percent interest rate on the balance of the loan.
The new bill also includes a simplified forgiveness application for those receiving less than $150,000 in PPP financing.
What’s more, borrowers could now take tax deductions on business expenses that were paid for with PPP loan funds, setting aside previous IRS and Treasury Department rulings.
See: Congress Urged to Restore PPP Tax Breaks
In addition, another $20 billion has been allocated to the Economic Injury Disaster Loan program (EIDL), and grants received under the program no longer have to be deducted from PPP forgiveness amounts.
Also, to help deter abuse of the small-business lifelines, publicly traded companies will be barred from participating in the program. The stipulation follows the disclosure earlier this year that large, well-funded organizations including the Los Angeles Lakers, Shake Shack, Ruth’s Chris Steak House and the Nathan’s Famous hot dog chain received (and later returned) tens of millions of dollars in pandemic relief loans.
For individuals, the legislation as it stands will provide $600 stimulus payments to the majority of adults and dependent children; set aside $25 billion in rental assistance; and add $300 a week in unemployment benefits, which will be extended past this Saturday’s expiration (Dec. 26) into March.
In a video tweet, President Trump proposed a $2,000 payout to individuals and objected to certain expenditures within the greater omnibus spending bill. The status of the stimulus package remained unclear at post time.