President Donald Trump has signed into law a new $ 900 billion coronavirus relief and stimulus package. Among its provisions: an extension of last spring’s paycheck protection program, allowing another $ 284 billion, or forgiving for small businesses, union-backed loans.
The initial program, overseen by the US Department of Treasury and Small Business Administration, shared $ 525 billion to more than 5 million recipients, but was fraught with loopholes and liabilities that raised countless issues during an already complex process.
The new funding aid clarifies questions about the hard-hit Small Business, Nonprofit and Enterprise Act lending process, but also adds rules for applying for new loans and apologizing for old ones. The bill gives the Small Business Administration 10 days to implement the new rules, so more specific rules may come. Until then, borrowers should turn to their lenders for guidance.
Here are some questions that business owners may have.
How does this round of loans differ from the previous one?
Some aspects are broadly similar. Applicants have between eight and 24 weeks to use the money, with at least 60 percent going towards payroll and the rest towards qualified expenses such as rent and utilities.
New debt is capped at $ 2 million compared to $ 10 million previously. Applicants must have no more than 300 employees, instead of 500, and must demonstrate at least a 25 percent drop in revenue from the fourth quarter of 2019 this year.
The bill expands the type of expenses covered to include such things as cloud computing or remote-work software; And government-mandated sanitation and social-removal equipment, like strainer guards or air filtration systems. It even “covers property damage and vandalism or looting due to public disturbances during 2020.”
One notable aspect of the new bill that is not directly tied to new debts is an extension of the employee retention tax credit, an aspect of the Coronavirus Assistance, Recovery and Economic Stimulus (CAR) Act that encourages employers not to hire. Originally, businesses that received a paycheck protection program loan were not eligible to claim that credit. Now they are.
If I have already got a loan, can I get another loan?
Yes. These are called “second draw” loans, and you can apply as long as you meet the above qualifications. The deadline for all new loans is 31 March.
Is a business eligible for more help than others?
New loan amounts are determined by a formula in which payroll costs increase manifold a Factor of 2.5 (again, capped at $ 2 million). Restaurant and other hospitality businesses can multiply those costs by 3.5, making them eligible for slightly more money.
The bill prohibits certain companies from applying for loans, including businesses specializing in political or lobbying activities – such as the Florida Democratic Party, which then received, around $ 780,000 last time. Also excluded: Businesses with extensive practices in China, or those on whose board are residents of China.
Concert venues, theaters and museums that had long been lobbying for additional assistance are not eligible for the new paycheck protection program loan, but can apply for a special “shut down venue operator” of up to $ 10 million .
How will this affect my existing apology application?
If you got more than $ 150,000, it likely won’t. If you fell short, the process should be very easy.
A few weeks ago, the government simplified the application for amnesty for businesses that received less than $ 50,000, detailing only how much loan money was spent on payroll, and how many employees the recipient received. Was able to maintain as a result. The new bill is limited to $ 150,000. Affected businesses will not be required to submit documentation supporting their claims, but must keep it in hand in case of an audit further down the line.
If you have already applied and received the pardon, then no new provision applies – you are done. But you can try taking another loan.