A new coronavirus relief package, which includes a second round of Paycheck Protection Program (“PPP”) funds, appears to be on the horizon. Details are still being worked out on the Hill, but here are some key updates and takeaways of what business owners may expect:
- New PPP Funds: As it stands as of December 18, 2020, the bipartisan proposal will include $288 billion in new funding for the PPP, and some companies will be eligible for a second PPP loan. Reports suggest that new PPP loans would capped at $2 million (compared to the $10 million cap in the initial PPP round) and that only companies with 300 or fewer employees would be eligible (down from the 500-employee limit in the initial PPP round). There are also discussions on restricting the maximum amount of funds that would be allotted for certain types of franchised or multi-unit companies, such as restaurant or hotel chains.
- Targeted Approach for Small Business: Lawmakers are trying to take a more nuanced approach to the new round of funding, and are carving out funds specifically for the hardest-hit industries such as owner-operator restaurants, theaters, daycares, etc., as well as trying to funnel more relief to businesses with 10 or fewer employees.
- Push to make PPP Expenses Deductible: Lobbyists and a bipartisan coalition are attempting to overturn IRS rulings that disallow deductions for expenses that the PPP program were designed to support. Under the proposed legislation, businesses would be able to obtain a tax deduction for operating expenses that were paid for using forgiven PPP loan funds.
Aside from the federal push for new funding, the State of Minnesota advanced its own assistance measure this past week in the form of an $88 million relief package. The MN Department of Revenue will automatically be distributing checks ranging from $10,000 to $45,000, based on tax records and employee numbers, to bars, restaurants, bowling alleys, breweries, coffee shops and some fitness centers that have seen at least a 30% drop in sales revenue from last year. Roughly 5,800 business are expected to be eligible for these funds. Additionally, the State package includes $114.8 million that will be earmarked for each Minnesota county to distribute to small businesses at the county’s own discretion.
With funding efforts continuing to evolve on both the federal and state level, we are vigilantly monitoring the situation and will provide additional updates when important legislation is passed.