Three big ways small businesses can benefit from the new Covid relief package
PPP related measures in the package now make A business owner can take out a second revocable PPP loan and has fewer restrictions on how the loan is used. It also eases the requirements for forgiveness of small loans. Companies are allowed to deduct expenditures paid by public-private partnership loans.
Additionally, this time, there are special provisions specifically designed to help minority-owned restaurants and businesses.
Chris Hearn, founder of Fountainhead, a non-bank lender that provides loans backed by the Small Business Administration, described the measures as a Christmas gift for small businesses.
Here is some key Changes to be made Public Private Partnership Loan Program:
Businesses can now take out a second PPP loan
Companies that received a PPP loan when the program enters into force now may apply for a „second draw”, as long as it is not a public company, does not employ more than 300 people, or has used or will fully use the first public-private partnership loan, It could show a decrease of at least 25% in total receipts in the first, second or third quarter of this year compared to the same quarter of 2019.
Specific amounts are allocated to community development financial institutions – which typically lend to minority-owned businesses in disadvantaged communities – as well as For companies with fewer than 10 employees, as well as in low-income areas.
Most qualified companies may receive a loan equal to 2.5 times the average monthly salary expenditures, just as before. But restaurants and housing companies may now apply for loans equivalent to 3.5 times.
No loan may exceed $ 2 million, less than $ 10 million originally.
Simplify the assignment process for loans less than $ 150,000
In order to be exempt from the PPP loan, companies that have borrowed $ 150,000 or less will simply need to present a one-page certificate that includes the number of employees the business has retained as a result of the loan, an estimate of how much the loan is being spent on the payroll and the total loan amount. Borrowers must also certify that the information is accurate and accurate Comply with loan requirements.
To get full PPP exemption, at least 60% of the funds must be used to cover payroll expenses. The remaining 40% or less can be used to cover a wider range of business expenditures than was the case during the initial PPP lending rounds.
Beyond mortgage benefits, Payments for rent and utilities, and loans, for example, can now be used to cover PPE and other expenses incurred to meet Covid restrictions, as well as some operations, property damage, and supplier costs.
Huge tax credit for business expenses
Companies usually deduct their payroll and operating expenses from their gross income.
But for companies that receive PPP loans, these expenditures are largely repaid through the loan.
The latest Covid relief package makes clear that if the loan is waived, it will be treated as tax-exempt for the company.
It further explains that although the tax-exempt loan may have paid for a lot of payroll and operating expenses, the company can still deduct those expenses on the tax return.
Tax policy experts bemoaned the lawmakers’ decision here as it considered a „classic double retreat” in the taxpayer’s pocket.
But for small businesses that have been just trying to survive the pandemic, they are a great source of relief because their revenues have been hit badly and any real recovery for them could take a long time. With the continuing restrictions of Covid and consumer fear.
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