For Small Businesses, a Second Stimulus Is Still on the Way – Here’s What to Expect

Mandatory Credit: Photo by Shutterstock (11546445ak)United States Representative Dean Phillips (Democrat of Minnesota) attends a press conference with a bipartisan group of US Senators announcing the legislative text of the two bipartisan, bicameral COVID-19 emergency relief bills that propose to provide up to $908 billion in emergency relief on Capitol Hill in Washington, DC.
Shutterstock / Shutterstock

The second $900 million COVID-19 relief package, still awaiting final sign-off, includes three changes to the Paycheck Protection Program, which will help small businesses, a segment of the economy that is taking the brunt of the financial effects of the pandemic.

Final details about direct payments are at the crux of the current stalemate and are rapidly changing (as of publication, Senate Majority Leader Mitch McConnell had just blocked the standalone measure to increase direct payments to $2000 from $600 mid-day Tuesday). But here’s what we know now about the PPP, according to language in the bill.

2020 in Review: The Year for Small Businesses Across the US
Explore: The Stimulus Check Secret You Need to Know Before You File Your 2020 Taxes

This second stimulus includes an additional $284.45 billion in lending to small businesses eligible for the aid: new borrowers and qualifying borrowers that already received a loan under the first round of PPP funding.

Some of the key components for these new PPP measures include the fact that it is now possible for a small business to take a second forgivable loan. They must however meet stricter eligibility criteria, including: have fewer than 300 employees and have experienced a reduction of at least 25% in gross receipts during a quarter of 2020 as compared with the same quarter in 2019. Businesses engaged in political or lobbying activities will also be ineligible for a second draw. In addition, the maximum loan amount available to a second-time borrower is $2 million, down from the $10 million cap on loans during the initial program.

Make Your Money Work for You
Sponsors of

Another key change for PPP loans in the new stimulus is that the bill relaxes requirements to have small loans forgiven, which qualify as loans of $150,000 or less. These businesses will only need to submit a one-page loan application with the number of employees, the estimated amount of the loan proceeds spent on payroll and the total loan amount.

See: What a $600 Stimulus Check Can Actually Buy You in America
Explore: Refusing to Wait for Congress, These Cities and States Are Handing Out COVID-19 Relief

The bill also includes measures specifically addressed to help small businesses that are minority-owned and restaurants.

Finally, the new bill clarifies that borrowers that received PPP loans under the original program or receive loans under the renewed program may take tax deductions for expenses paid for with PPP loan proceeds. That could mean big relief come tax time — and it’s just one of many answers to people’s complicated COVID-19 questions that hang in the balance.

More From GOBankingRates

About the Author

Yaël Bizouati-Kennedy is a former full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

For Small Businesses, a Second Stimulus Is Still on the Way – Here’s What to Expect
Close popup

Win $500 – and Start the New Year Right!

When you sign-up to receive bi-weekly email updates from GOBankingRates, you’ll automatically be entered for a chance to win our $500 #BestBanksBestYou sweepstakes. Sign up now!

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For official contest rules, please go to: gobankingrates.com/best-banks/official-rules/