- December 22, 2020
- Posted by: admin
- Category: Blog, News
The only way you have missed all the talk around the new stimulus package is if you’re off on a remote island, no wi-fi, relaxing on the beach and enjoying a mimosa right now. But if you are like the average American who visits yahoo or checks social media first thing in the morning, it’s nearly impossible to miss.
Congress has indeed passed a $900B coronavirus relief bill, which is set to be signed into law really soon. Here’s what we know so far…
Any expenses paid with PPP funds are indeed TAX DEDUCTIBLE. This one’s a biggie. It’s what we in the tax and accounting arena have all been waiting to hear. Congress and the IRS were at odds with regards to if these expenses would be deductible or not. The IRS said NO, and Congress failed to address the language of deductibility in the passing of the initial CARES Act.
There WILL be another round of PPP funds. Over $280B will be allocated to the PPP (Paycheck Protection Act) loan program. There are few changes as to the requirements. The business must have 300 or fewer employees & a decline in gross receipts of at least 25% in any quarter in 2020 as compared to the same corresponding quarter in the prior year. If your business meets the requirements, the money is there – APPLY! To add icing to the cake, if used for qualified expenses, it’s possible that the entire loan will be fully forgiven.
PPP funds can be used for a broader range of expenses. In the initial Coronavirus aid package, qualified expenses were defined as rent, mortgage, utilities and of course payroll. The new bill includes additional qualified expenses.
If your business received a loan of $150,000 or less, forgiveness is basically automatic. But not so fast, the business owner will still be required to sign a one-page form in order to have their loan forgiven.
There is additional funding for the EIDL loan program. An additional $20B will be allocated to the EIDL loan program. Unlike the PPP loan, the EIDL loan must be repaid. 3.75% rate for small business and 2.75% for non-profits with a 30-year term.
That’s all for now. Until next time…