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A second coronavirus stimulus package passed on December 21, and it isn't quite as generous as the first. It targets small businesses that are struggling the most during the coronavirus pandemic. Businesses that already got a Paycheck Protection Program (PPP) loan will likely have access to more funds — and some might be eligible for another loan.
It also establishes a grant program for businesses that rely on ticket sales and clarifies some confusion over whether PPP forgiveness is taxable — it isn't. Here are the highlights.
The widest-reaching impact the second stimulus might have is the expansion of the types of costs eligible for PPP loan forgiveness. If your business spent money on the following types of costs, you could be eligible to receive more funds, which qualify for forgiveness.
Group insurance, such as disability, life and dental, are also now counted as eligible payroll expenses. Talk to your PPP lender to find out how to access those extra funds if you think you qualify.
Small businesses hit particularly hard by government shutdowns or slowed sales could be eligible for another round of funding through the PPP Second Draw Loan Program.
This round of PPP funding won't be as easy to qualify for as the first. Businesses must meet the following criteria to make the cut.
Small 501(c)(6) organizations can also qualify as long as they have fewer than 150 employees and aren't involved in lobbying or political activities. This includes local chambers of commerce and tourism offices.
With the second stimulus now signed, applications for PPP Second Draw loans should start opening up soon and will be available until March 31, 2021.
The new bill also set aside a portion of Second Draw PPP funding for businesses that struggled to access the first round of PPP funding. This includes businesses with up to 10 employees and business owners that have historically struggled to receive funding.
These Second Draw PPP loans will be available through the Minority Business Development Agency and small community lenders that include the following:
This round of stimulus funding also creates a grant program for live venues and other businesses that were forced to close due to social distancing restrictions and stay-at-home orders. This includes venues like independently owned theaters, cinemas and museums — places that rely on ticket sales as a main source of revenue.
Eligible businesses earning 10% of a normal year's revenue or less would get first priority. Grant amounts are based on your operating expenses during the pandemic, up to $10 million. Like with the Second Draw PPP loan, the government will set aside $2 billion in grants for venues that have 50 or fewer full-time employees.
The second stimulus bill extends payroll taxes for another year, to January 1, 2022. After that date, your business is required to pay half the taxes by the end of 2022 and the other half by the end of 2023.
It also clarifies that you don't have to pay taxes on the loan forgiveness or grants. This includes the following programs:
This round of stimulus also makes it a lot easier to qualify for forgiveness on smaller loan amounts. If you borrowed less than $150,000 through the PPP, you can apply for forgiveness by filling out a simple one-page form.
If you borrowed between $150,000 and $2 million, you aren't required to submit any supporting documentation along with your forgiveness application — though you'll have to keep employment records for four years and all other relevant documents for three years.
Higher loan amounts are subject to the current forgiveness process.
This bill extends the SBA debt relief that small businesses received through the CARES Act for three to eight months, depending on your industry and when you received the loans.
This means that the SBA will continue to cover principal and interest payments on loans through the SBA 7(a), 504 and microloan programs during that time. It will also cover any fees associated with repayments through these loan programs.
This debt relief covers both new and current SBA loans.
In addition to these three main programs, the new stimulus bill would also provide the following relief to SBA loan programs that are currently running:
The second stimulus package is being referred to as a stopgap for good reason — it's not going to fix all the current hurdles businesses are facing, but it's a start. Read about other resources for your small business with our guide to business financing during COVID-19.
All lenders are now accepting First Draw and Second Draw loans until March 31st. Here are tips for how to pick a PPP lender.
Lenders with less than $1 billion can submit applications to this COVID-19 assistance program before it fully reopens Tuesday.
The PPP wasn’t made with sole proprietors and independent contractors in mind. Here are other options that can help.
Some PPP borrowers can get another round of funding through community lenders — though not all can qualify.
You only have until the end of March to get your next application in.
First Draw loans are now available through nonprofit lenders, with Second Draw loans following shortly behind.
While you can get started on your loan application today — you’ll still need to wait for funding.
Grants of up to $10 million for businesses that rely on ticket sales.
Find out who’s getting checks, unemployment benefits, student loan relief and more.
The next round of stimulus could mean a year of interest-free deferment on federal student loans.