New Covid-19 relief includes $285 billion in Paycheck Protection business loans
Washington, D.C. – American Sustainable Business Council applauds Congress’s successful bipartisan effort to mitigate the current economic crisis by passing a new stimulus package. Signed into law at the end of December, it includes the renewal of the Paycheck Protection Program (PPP) originally created in the CARES ACT of March 2020.Under this new regulation, $285 billion will be allocated for loans to first- and second-time small business borrowers.
In contrast to the CARES ACT, the new bill’s benefits will be expanded to non-profits and will be reserved for borrowers with fewer than 300 employees and who suffered a decrease in gross receipts of at least 25% in any one quarter of 2020 compared to the same quarter in 2019. Other changes in the new PPP also include a $2-million cap for second-time borrowers, and ineligibility of publicly-traded companies and lobbying/political organizations.
In addition to covering wages and operating costs, PPP loans can be used for qualifying expenses such as covering property damage, supplier cost, and purchasing Personal Protection Equipment (PPE) for workers or customers. Expenses will be deductible for tax purposes even if paid with PPP forgivable loans.
To reach more minority-owned businesses and have a deeper impact on local economies, the new PPP package reserves a portion of the budget for small community banks, credit unions and community development financial institutions (CDFI). It is widely accepted now that minority-owned businesses have been particularly affected by the economic consequences of the pandemic, and that an overall financial recovery requires more inclusive distribution of stimulus funds.
Other relevant benefits in the new package include an extension of rent moratoriums until January 31, 2021, a $600 check to individuals with an income of up to $75,000 a year, and for those on unemployment insurance, an additional weekly check of $300 for 11 weeks.
Despite significant advances, the new legislation did not provide paid leave benefits; a critical need for employees trying to recover from Covid or caring for a loved one during the worst health crisis in a century. ASBC again affirms our assertion that people who keep our country running during this crisis, often at risk, should not have to fear missing a paycheck when sick.
For more information on how your business may be impacted by this new bill, please see H.R 133.