After a stop-and-start process over the past few months capped by a feverish few days of negotiations, Congress passed a $900 billion stimulus package on Monday. It’s a sprawling piece of legislation that covers a second round of direct stimulus payments to individuals, expanding unemployment benefits, and extending certain types of tax relief for the next year.
The fate of the relief package, which has been combined with the omnibus bill that funds the federal government, now rests with President Trump, who yesterday expressed dissatisfaction with the size of the $600 direct payment, preferring instead to see a payment of $2000 per person.
Should the bill be enacted into law, $325 billion would be dedicated to helping small businesses, including provisions to specifically bolster the restaurant and hospitality sectors.
The biggest chunk of the proposed business-related stimulus package funding is for additional rounds of the Paycheck Protection Program (PPP), the highly popular provision of the original CARES Act that provides a forgivable loan so that small business can keep its workers on the payroll. The Small Business Administration (SBA) will forgive the loans if all employee retention criteria are met and the funds are used for eligible expenses.
The original PPP program ended in August and the $284 billion in additional funding under the new stimulus bill would extend PPP to March 31, 2021. Other changes to the PPP program proposal include:
- Establishing a set-aside specifically for very small business (10 or fewer employees) and small business in distressed areas;
- Allowing small businesses in the restaurant and hospitality industries to receive larger loans up to 3.5 times their average total monthly payrolls, compared to 2.5 time payroll costs for other sectors;
- Adding PPE expenses and the costs associated with outdoor dining as eligible and forgivable expenses;
- Allowing a second PPP forgivable loan for the hardest-hit small businesses and nonprofits with 300 or fewer employees that can demonstrate a loss of 25% of gross receipt in any quarter during 2020 when compared to the same quarter in 2019;
- Expanding PPP eligibility to tourism promotion organizations and local chambers of commerce;
- Repealing the requirement of deducting an economic injury disaster loan (EIDL) advance from the PPP forgiveness amount.
Meanwhile, the EIDL grant program would be increased by another $20 billion with small businesses and nonprofits in low-income communities eligible to receive up to $10,000 in grants. Another $15 billion would be reserved to help entertainment establishments, such as live venues, independent movie theaters and cultural institutions.
The SBA has about 10 days from enactment of the bill to establish its rules and protocols for distributing the new funding from the stimulus package, which means that procedures for businesses to apply won’t be finalized until after the new year.
The Coconino Small Business Development Center will be hosting a PPP and Disaster Assistance webinar on Tuesday, Jan. 12 at 2 p.m. You can register for the session here.
Should it be enacted, this economic assistance package for individuals, families and small businesses are a welcome relief as we continue to work towards a recovery from the pandemic.