Putting in long hours over the weekend and into the Monday of Christmas week, leaders in the House and Senate finally reached an agreement on another pandemic relief bill package. This time to the tune of $900 Billion (the second largest federal stimulus package after the $2 Trillion CARES Act passed in March). President Trump still has to break out the Sharpie, but here are a few highlights:
- “Economic Impact Payments” may show up in qualifying recipients’ bank accounts by early next week (unlike last time when for many, checks were “in the mail” when spring turned to summer). This round consists of $600 for each adult (based on 2019 individual gross income of less than $75K and married couples with combined incomes of less than $150K) and $600 per dependent. The intent once again is to boost the economy. It seemed to work (at least on paper) in the last round. Let’s see if it is enough to get us through until the vaccine kicks in.
- PPP Loan Deductibility; This very significant change in the PPP “rules” will allow borrowers NOT to lose the income tax deduction that was expected to be available for expenses paid from PPP loans (on items that are normally tax deductible). This is in addition to not including funds received and forgiven as income. Double dipping. . . Maybe, but wasn’t this program made available to keep businesses afloat?
- Second Round of PPP Loans are Coming ($285 Billion allotted; $138 Billion of which had not been spent from the first round); The new Act allows first time and previous borrowers to receive a PPP loan if they meet the requirements of an “eligible entity.” These include but are not limited to (as we await more guidance):
a. Less than 300 employees (this may vary for first or second-time applicants)
b. Revenue reduction of at least 25% in at least one comparative quarter (2020 relative to 2019)
o The new bill would also expand the list of expenses that a loan could be used to pay (previously limited to payroll, rent and utilities).
o Although we don’t yet know the timeframe surrounding application processing and fund distribution, according to an SBA spokesman, “the agency is committed to ensuring that the next round of PPP is launched as quickly as possible.”
Stay tuned as more information becomes available.