Your Business Credit

Will a second stimulus bill help your small business?

A new coronavirus relief package would include streamlined PPP forgiveness, grants for restaurants and bars


If the latest COVID relief bill moves forward as it now stands, it will include $1,200 direct stimulus payments, more robust weekly unemployment payments and more help for small businesses, along with specific help for industries such as restaurants.  

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Many small business owners are still hurting after six months of pandemic.

And many that have been hanging on are in danger of closures, as negotiations over a coronavirus relief package have been stalled for months.

One big sticking point has been how much money to allocate for it. Currently, the proposal would cost $2.2 trillion, a figure that concerns Republicans, who’ve tried to keep costs down.

The good news is that there does seem to be some movement on a second round of stimulus. On Oct. 4, House Speaker Nancy Pelosi reported there was no deal yet on a new package, but that she and Treasury Secretary Steven Mnuchin, who have met over the past week, had been “making progress.”

Meanwhile, President Donald Trump tweeted his support for more stimulus legislation while hospitalized with the coronavirus.

“Our great USA wants and needs stimulus,” he tweeted. “Work together and get it done.”

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What would a second stimulus package look like?

Should the bill move forward as it now stands, it will include $1,200 direct stimulus payments, more robust weekly unemployment payments and more help for small businesses, along with specific help for industries such as restaurants.

Specifically, it includes streamlined forgiveness for Paycheck Protection Program (PPP) loans under $150,000 and a second round of aid for struggling businesses that have already received a loan.

The PPP, established under the CARES Act this spring, offers forgivable federal loans for small businesses. House Democrats have put forth the idea of offering second loans to small businesses with fewer than 200 employees who have seen a 25% reduction in quarterly revenue year-over-year because of the pandemic, CNBC reported.

To make sure the loans don’t go to larger firms, the bill’s proponents suggest excluding publicly traded firms and setting limits on businesses that have more than one physical location.

Under the bill, it would be easier for small businesses to get PPP loans forgiven. Those who took a loan under $50,000 would only need to certify to the government that they met the program’s requirements for forgiveness and retain documentation to prove that, in case they are audited, according to CNBC.

Firms that borrowed $50,000 to $150,000 must submit a simplified forgiveness application to their lender and hold onto their documentation in case of an audit.

One issue that remains on the table is whether business owners who received the PPP can deduct business expenses they used the loan to cover. The IRS has said the forgiven amount is tax free, but the business expenses are not deductible.

The Democrats’ new bill says that expenses paid or incurred with a forgiven PPP loan can still be deducted, according to CNBC.

There would also be a $120 billion grant program for restaurants and bars to cover payroll, rent, supplies and PPE. The program would be run by the U.S. Treasury. The National Restaurant Association has pushed for the fund.

See related: Most Americans plan to spend less after the pandemic than before

Bottom line

The upshot for small business owners: Keep your eye on the headlines. If Republicans and Democrats make a deal, it could bring substantial relief for small business owners.

Understanding the implications for your business will help you make the most of any aid that’s available, if you are eligible.

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