How the latest coronavirus relief bill is helping small businesses
Small businesses have been battered by the COVID-19 crisis.
New coronavirus relief legislation promises new hope for struggling small businesses that have been particularly hard hit by the pandemic and the ensuing economic crisis.
Often with less capital and resources than their larger counterparts, many small businesses have been hit by local shutdowns and restriction orders put in place to curb the spread of the virus. One in four small business owners said they are expected to close their doors for good in the next six months if current economic conditions do not improve, according to a December survey of the National Federation of Independent Business.
Here’s what the coronavirus relief package, signed by President Donald Trump on Sunday, includes for small businesses.
The new legislation designates more than $ 284 billion to revive the CARES Act’s Paycheck Protection Program (PPP), which offers forgivable loans to business owners in an effort to keep their employees on. the payroll in the midst of the crisis.
The new relief extends the program until March 31, 2021 and also extends the eligibility requirements for the use of funds (such as property damage) and simplifies the process for applying for loans under $ 150,000.
The revamped PPP also includes a “second draw” program that allows particularly affected small businesses to apply for a second loan of up to $ 2 million. Small businesses need to meet more stringent restrictions on these loans, such as employing fewer than 300 people and being able to demonstrate a decline of at least 25% in sales for at least one quarter of 2020 compared to the same quarter of 2019.
The revised PPP in the second round of legislation has been broadened so that nonprofits and local news agencies are now eligible for the funds.
The new legislation also includes tighter restrictions on new loans to avoid some of the problems that plagued the PPP initiative the first time around, when many loans ended up going out. recipients who raise eyebrows like Kanye West’s fashion brand and companies with family ties to Trump.
In addition, the new legislation also provides for $ 15 billion in dedicated funding for theaters, independent cinemas and cultural institutions.
Finally, the legislation also includes $ 20 billion for targeted grants of economic disaster loans through the Small Business Administration – offering a new lifeline to some of the smaller businesses struggling with the crisis.