New COVID Stimulus and PPP Program updates for small business

by | Jan 5, 2021 | Small Business Administration, Small Business Funding | 0 comments

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With developments continuing to unfold in the government’s response to the quick spread of the coronavirus, as a small business owner, you may have some questions regarding the new COVID Stimulus and associated funding options that can help bolster your small business during this challenging time.  

You will be pleased to know that Congress has passed the second COVID Stimulus bill, and President Trump has signed it into law. Did you know that the new coronavirus stimulus package has allocated an additional $284 billion for eligible small business enterprises in the country? The new stimulus carries requirements not present in the first stimulus package, particularly around who can access the PPP (paycheck protection program).

Here is how the new bill can help your small business.

Eligibility for a Second PPP Loan

You may know that under the CARES Act, small businesses adversely affected by the COVID-19 pandemic could avail Paycheck Protection Program loans. You will be happy to know that the government has replenished these funds under the new relief package. Also, it is worth noting that even if you received a business loan the first time, it is possible to qualify for a second PPP loan.  

Note that the important condition of this COVID Stimulus is that if your business received a PPP loan in the past, you should have already used the funds or have specific plans for using them to become eligible for more PPP funds. Did you know that the government has earmarked specific amounts for many community development banks and financial institutions?

Simplification of Forgiveness of Paycheck Protection Program Loans

Now you can benefit from the COVID Stimulus with a simplified and streamlined application process for all loans under $150,000. Note that according to the new lending rules, you only have to sign and timely submit to your lender or bank a certification that specifies:

  • The number of workers you were able to retain due to the covered loan
  • How much of your loan you have spent so far on payroll costs

Also, you must attest that you accurately furnished the required certification as well as complied with all the applicable requirements of the Paycheck Protection Program loan. 

Expansion of Employee Retention Tax Credit

Did you know that the new bill also considerably expands the ERTC (Employee Retention Tax Credit)? The law has extended the ERTC to July 1st, 2021. The best thing is that the credit rate was increased to 70% from 50% of qualified wages. In the past, businesses mainly overlooked this credit as they couldn’t use it with the PPP.

PPP Forgiveness Expenses are Deductible

There is no doubt that this is another important relief. Keep in mind that all expenses that you use in order to apply for PPP forgiveness are now tax-deductible for your small business to the degree they are tax-deductible under the current law.

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