The Latest with the 900 Billion Dollar Stimulus Bill
Text of the new stimulus bill was released and your team at The Hustle Firm has been pouring over the legislation to find the most relevant updates. More updates to follow, but here is what we know now that the House (359-53) and Senate (91-7) have passed 5,593 pages of new legislation:
Deductibility
- The one we all were waiting for! PPP expenses are now fully deductible. To the best of our understanding, there are no caveats and no thresholds.
- NOTE: NYS has been silent. Considering what they’ve done over the last few months, we wouldn’t be surprised if the PPP is fully taxable in NYS. Keep that in mind when tax planning. NYS rates are typically between 6 and 7%.
2nd Draw PPP Loans
If eligible, you can take a second loan in the amount of:
- Option 1 – take 2.5x average monthly payroll for the 12 month period prior to the loan application date
- Option 2 – take 2.5x average monthly payroll for calendar 2019 (which is what most people did for 1stDraw Loans)
- NOTE: For our restaurant and accommodation industry friends: you get 3.5x (anyone in NAICS Code 72: https://www.naics.com/six-digit-naics/?code=72)
- Must have under 300 employees
- Must have sustained a reduction in revenue
- For entities in business all of 2019
- 25% (not 30% as previously thought) reduction in revenue
- Compare any quarter in 2020 (if Q4 2020, have to wait to apply until after 1/1/2021) to the same quarter in 2019. Key is “or” – suggesting that it can beat the borrower’s discretion
- For entities not in business during Q1 or Q2 of 2019
- 25% compared any quarter in 2020 to Q3 or Q4 2019
- For entities not in business during Q1-Q3 2019 (only Q4 2019)
- 25% compared any quarter in 2020 to Q4 2019
- For entities not in business during 2019, but were on 2/15/2020
- 25% reduction for Q2, Q3, or Q4 when compared to Q1 2020
- Simple certification process for loans up to $150k (just submit a 1-pager)
Allowable expenses for 2nd Draw Loans now include:
- Software and computing services to facilitate business operations, tracking of payroll, sales & billing – etc.
- Property damage – specifically if sustained during “public disturbances” in 2020
- Supplier costs – essential costs incurred to run your business
- Worker protection costs (think masks, plexiglass, drive up windows, etc.)
Increased ability for PPP borrowers to request an increase in loan size due to updated regulations
- If you calculated the amount wrong the first time, you should be able to increase your loan amount for the mistake (for example – if you left out owner compensation)
Small Biz Debt Relief
- 6 more months of principal and interest payments (subject to some restrictions and coordination with other clauses) – this is for businesses with 7A loans
- If payments are more than $9,000, the amounts may be added as interest to be paid at the end of the loan (by the borrower)