The new $900 billion coronavirus relief package that Congress is expected to pass on Monday includes a $284 billion extension of Paycheck Protection Program small business loans and tax breaks for borrowers.
Lawmakers reached a deal on a package Sunday that fell well short of the $3 trillion bill the House passed in May but never reached a vote in the Republican-controlled Senate.
House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer called the plan a “package that delivers urgently needed funds to save the lives and livelihoods of the American people as the virus accelerates” but said they would push for more relief spending after President-elect Joe Biden takes office on Jan. 20.
“The coming help will not reverse the closures of small businesses across the country or the poverty and hunger that spread for months while Congress failed to act,” CNBC reported.
The aid includes direct payments of $600 to most adults and $600 per child and pumps another $284 billion into the PPP, with eligibility expanded to cover so-called 501(c)(6) non-profits, such as local chambers of commerce.
Small businesses who already borrowed from the program may receive a second loan if they have fewer than 300 employees and can prove that their revenue has fallen by 25%. The maximum amount for a second draw will be $2 million.
Dan Herron, principal of Elemental Wealth Advisors in San Luis Obispo, Calif., was skeptical that business owners will have an appetite to borrow more money. “I don’t think clients want to do it again,” he told CNBC. “The continually moving goal posts, the lack of uniformity on forgiveness applications — it’s a pain.”
However, the new legislation also provides that expenses paid for with PPP loans will be considered tax-deductible, officially reversing an IRS decision made earlier in the year that would have seen some small businesses pay more in taxes.
“The ability to deduct expenses if paid for with PPP loans had been the focus of intense lobbying by small business groups” in the face of opposition from the Treasury Department, the Washington Business Journal noted.