The latest federal coronavirus aid package provides $ 325 billion to small businesses affected by the pandemic.
The money is part of the $ 892 billion coronavirus relief package that Congress approved on December 21 to help struggling Americans and businesses.
President Donald Trump has not yet signed the bill and wants changes that could jeopardize the entire package, despite the fact that both the House and Senate passed it with a veto-proof majority.
The $ 325 billion small business investment includes $ 284 billion towards a second round of forgivable Payroll Protection Program loans that are now being rolled out to nonprofits, local newspapers, and television and radio stations.
It also allocates $ 12 billion to minority and very small businesses that have struggled to gain access to the first round of PPP funding.
Eligibility to participate
The second round of PPP loans will be limited to companies with no more than 300 employees and the loans will be capped at $ 2 million. Listed companies are not eligible.
Small businesses that have previously received a PPP loan can get a second loan if their earnings are down 25% this year.
PPP borrowers can also make tax deductions on covered business expenses including rent and utilities.
The new aid package includes $ 20 billion in targeted grants under the US Small Business Administration’s Economic Injury Disaster Loan program of $ 43.5 billion Continuation of SBA debt relief payments and $ 2 billion to improve SBA lending.
It also includes $ 15 billion for independent cinemas, cultural institutions and live music venues.
Additionally, the bill provides $ 45 billion for transit agencies, airlines, airports, state transportation departments, the coach industry, and Amtrak.
Employee retention tax credit
Previous PPP loans raised $ 525 billion to over 5.2 million businesses nationwide, including more than $ 6.6 million to over 63,000 Connecticut businesses.
Businesses that get PPP loans can qualify for lending by spending at least 60% on payroll to keep employees and the rest on rent, mortgage, utilities, and interest on existing debt.
The law also extends and extends the tax credit for employee loyalty until July 1, 2021.
The invoice clarifies that companies can claim the employee retention tax credit and obtain a PPP loan.
It increases the refundable income tax credit from a maximum of $ 5,000 to $ 14,000 by changing the calculation from 50% of wages paid to $ 10,000 to 70% of wages paid to $ 10,000 for a quarter.
Employee Loyalty Credit provides an income tax credit to businesses of all sizes, including nonprofits, on wages paid during an interruption in business operations or during periods of significant loss of income.
The bill makes it clear that businesses can take this tax credit and get a PPP loan.
Additional tax credits
It also lowers the threshold for medical expenses deduction from 10% to 7.5% and extends loans that employers reimburse for paid sick and family leave paid to workers for three months due to COVID-19.
The bill too:
- Extends job opportunities tax credit by five years and helps employers keep hiring disadvantaged people
- Makes the non-partisan law on the modernization and tax reform of craft beverages permanent and offers the growing craft beverage industry excise tax relief
- Extends the medical expenses allowance extension for another year to reduce medical expenses and long-term care tax costs
- Extends CFC Review Rules for US Multinational Corporations by Five Years to Enable the Efficient Way to Recover Overseas Trapped Dollars and Keep US Companies Competitive Abroad
- Extends the tax credit for new markets by five years to the 2020 level
The bill also extends the health insurance tax credit by one year. This helps subsidize the cost of continued coverage for retirees and others who have lost their health insurance, as well as pensions and other benefits, if their employers either file for bankruptcy or lay off workers due to foreign trade.
Firms with 500 or fewer employees can take the health insurance tax credit at any point in the quarter based on wages paid in the same quarter last year.
income tax
The legislation also extends the deadline for repayment of certain wage taxes for workers that the Trump administration postponed employers in August.
The administration allowed the wage tax to be deferred in the fourth quarter of 2020, with employees having to repay it gradually between January 1 and April 30, 2021, with a fine and interest incurred on May 1.
The invoice extends the repayment period to December 31, 2021, with the penalty and interest incurred from January 1, 2022.
The legislation expands the refundable tax credits for federal paid sickness and family leave benefits.
The new Relief Act also extends the refundable tax credits for paid sick leave and family leave set out in the Family First Coronavirus Response Act until the end of March 2021.
In addition, the tax credits will be changed to apply as if the corresponding employer mandates were being extended to the end of March 2021.
It allows individuals to use their average daily self-employed income from 2019 instead of 2020 to calculate the loan.
It also includes a provision that increases the business lunch tax deduction from 50% to 100%.