The following content is informational only. When making financial decisions, we encourage you to consult qualified professionals.
After a long debate, Congress and the President have recently passed another $900B stimulus package in response to the COVID-19 outbreak. This second relief package will filter more cash into the economy and provide additional support for small and medium-sized businesses, including another round of forgivable loans.
We’ve put together a guide below to help you interpret the potential impact of the new relief bill, and navigate what it might mean for small businesses like yours. If you have previously received PPP (Paycheck Protection Program) forgivable loans, you can reach out to your lender to see if you qualify for a second loan. If you have not previously applied, you can apply now through your lender, or our partner Womply.
What’s in the new stimulus?
The new $900 billion stimulus package focuses on small business relief, cash transfers, unemployment insurance, and other benefits to education and healthcare, including:
$284 billion in new PPP loans for small businesses.
A second set of forgivable loans for businesses that can show significant losses in 2020 over their 2019 revenue, in addition to funding for businesses that did not receive PPP money in the first round. Borrowers with fewer than 300 employees that had a 25 percent drop in sales from a year earlier in at least one quarter can qualify for an additional loan. The new bill expands the list of expenses that a loan could be used to pay, including payroll, rent, utilities, supplies from vendors, and protective equipment for their staff or to fix property damage. Also, if you opened recently, you still may be eligible for this round.
There is also additional funding for targeted EIDL grants as well as earmarks for minority-owned businesses, and other new types of businesses. We encourage you to be thoughtful about assessing your eligibility for this second round, either through your lender or through our partner Womply if you need help getting started. Read more about this program here.
Fixed PPP tax deductions.
The bill also addressed a major issue with the PPP: the deductibility of expenses paid for with the forgivable loan. Now, the bill clarifies that purchases made with PPP loans will be deductible for tax purposes.
$166 billion in stimulus checks to households.
Similar to the April CARES Act $1,200 direct payments, this is intended to generate demand in the economy and may be sent to you personally. Most adults will get $600, though the payment decreases based on income. For every dependent, the payment is an additional $600. Read more about this plan here.
Expanded unemployment benefits.
The unemployed will receive a $300 weekly federal enhancement in benefits for 11 weeks, from the end of December through mid-March. This is half of the earlier federal boost, which ran out at the end of July. Read more here.
Other support across the economy, including education and healthcare.
This will include funding for schools and universities, the transportation sector, vaccine distribution, food assistance, and rental assistance. It also extends an eviction moratorium through January 31, 2021.
That said, the legislation also excludes two of the toughest issues which delayed negotiations for months: funding for state and local governments, and liability protection for businesses against COVID-related lawsuits.
How to navigate rent relief
We’ve heard from many of you that you’ve been able to obtain rent relief from your landlords. Be sure to check out our blog post on negotiating commercial rent with tips from a real estate expert to see if you can get your cost down. You can explore inquiring about pandemic clauses in any new leases or lease addendums, to ensure you are protected if there is another government lockdown.
We’re here for you
We will continue to share resources and provide you with educational content on how these policies may impact your businesses. From all of us at Faire, we’re wishing you a healthy and safe new year.