CHICAGO — In the new coronavirus relief package recently approved by Congress, the Paycheck Protection Program (PPP) is expanding, providing cleaners meeting the requirements with another chance to receive aid — even if they got funding during the program’s first round.
This will be a continuation of the Coronavirus Aid, Relief, and Economic Security (CARES) Act created in March. The $900 billion relief package agreed to by Congressional negotiators on Dec. 20, 2020 puts another $284 billion into the PPP program. It also clarified some issues of concern that many business owners had about taking deductions related to the program.
Part of this funding will be made available to businesses that did not receive PPP aid when Congress first developed the program. It will also allow companies that did receive money to get a second set of funding if they can show losses of 25% or more from 2019 to 2020 — something many dry cleaners would have no problem declaring.
The PPP, which allows businesses to borrow money from private lenders without putting up collateral or personal guarantees, closed in August 2020, with around 5.2 million businesses receiving loans from the $500 billion pool allocated to the program.
The goal was to assist owners in paying their employees; 60% of the loans received were to be used to cover payroll, with the remaining funds available for rent or mortgage payments, utilities or interest on outstanding loans. Businesses that met these requirements also could apply for loan forgiveness, effectively transforming the loan into a grant that did not need to be repaid.
Deductions and Forgiveness
One of the points of confusion was whether the business owner could deduct the expenses that the loan covered. This and other points of confusion led to $130 billion of the fund going unused by the time it closed in August. The new language in the package now states that those expenses can be deducted.
There were also changes made in the process to have the loans forgiven. Applications of loan forgiveness of up to $150,000 will now only require owners to complete a one-page form with borrower certifications. The paperwork for loans between $150,000 and $2 million has also been simplified.
Borrowers may qualify for loans amounting up to 2.5 times their average monthly payroll costs. In addition to the previous non-payroll items allowed, the new package also allows the remaining 40% of funds received to cover operation expenditures, property damage costs, supplier costs and worker protection expenditures.
The agreement requires that the Small Business Administration (SBA) start to distribute the funds no later than 10 days after the bill becomes law. Current plans are for the program to run through March 31, 2021.
For more information about the new round of PPP loans, visit https://www.uschamber.com/report/guide-small-business-covid-19-emergency-loans