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When will we get a second stimulus bill and will it help your small business?

A new stimulus package seems likely, but we don't know if it will happen before or after inauguration day.

Summary

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 months after the start of the 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.

Both Democratic Speaker of the House Nancy Pelosi and Republican Senate Majority Leader Mitch McConnell have voiced their support for passing another stimulus package before the end of the year.

What would a second stimulus package look like?

A big sticking point has continuously been how much money to allocate for it, and that is unlikely to change.

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.

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.

Republicans in the Senate countered this plan with a scaled back coronavirus aid bill, but it was blocked by Senate Democrats. Though this plan left out many of the elements included in the House bill, it also included funds for second round of PPP loans.

“Even before the election, Senate Republicans proposed a $500-plus billion package to expand unemployment benefits, offer a second iteration of the Paycheck Protection Program and more,” says Ted Rossman, industry analyst at CreditCards.com. “Democrats wanted even more, so small businesses have good reason to hope for more PPP aid.”

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

What would a post-inauguration stimulus bill look like?

If the Trump administration and current Congress come to an end without passing a new stimulus package, President-elect Joe Biden has already announced that the coronavirus pandemic – and the resulting economic fallout – will be a priority once he is inaugurated on Jan. 20, 2021.

“Our work begins with getting COVID under control. We cannot repair the economy … until we get this virus under control,” Biden said during his Nov. 7 presidential acceptance speech.

Though Biden’s speech primarily focused on the pandemic’s health impact, he will likely also focus on the economic impact, since he has already released his Emergency Action Plan as part of his campaign. This proposal includes at least $377 billion allocated for small businesses.

Bottom line

How quickly the Biden administration would be able to implement a plan – and what the final bill would look like – could depend on which party controls the Senate, which will be determined by two January runoffs in Georgia.

But there’s still a chance that small businesses will find relief before Jan. 20, since both McConnell and Pelosi have stated that this is a priority for the November session.

The good news for small business owners is that both parties are committed to providing more funds under the PPP. So the real question might not be if small business owners can expect relief, but when that relief will arrive.

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