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VARC Solutions is a nationally recognized QuickBooks consultancy, and as such, we are staying apprised of how the economy has been affected by the COVID-19 pandemic. Both businesses and individual families have been adversely affected by the pandemic and the US Congress has passed a new stimulus program, aimed at both businesses and individuals, just in time for Christmas. The total amount that has been approved is about 900 billion dollars. Outlined below are highlights of the program that will help many businesses stay afloat this winter, as well as provide assistance to individuals and families.
Small Business Assistance
The Paycheck Protection Program will be reopened – with some changes from round one.
- About 300 billion dollars has been put forth for this program, which will operate much the same as did the program that ran from April to August of 2020.
- First-time borrowers will be subject to the same eligibility rules as in round one.
- Businesses with less than 500 employees will be eligible to apply for first-time funding.
- Businesses, some nonprofit organizations, self-employed workers, and contractors will be eligible to apply.
- Second-time borrowers can apply for the program if they have 300 or fewer employees and can demonstrate that they had at least a 25 percent reduction in gross receipts during a quarter in 2020 compared to the same quarter in 2019.
- Of great importance to those businesses that have already received a PPP loan is the fact that funds they received will not be considered taxable income. For those business owners in the upper tax brackets, this will mean a savings of up to 37,000 dollars per 100,000 dollars borrowed.
- In the first round of PPP loans, the process of applying for loan forgiveness was streamlined for those that received 50,000 dollars or less; in the second round of loans, this will be increased to 150,000 dollars.
- There is a carve-out of 12 billion dollars specifically directed to minority-owned businesses.
Employers that are deferring employee payroll taxes as a result of the executive action by Trump in August have until the end of 2021 to increase withholding to bay back the taxes owed. The original date for this repayment was April 30, 2021.
Individual assistance and unemployment benefits will be extended to include additional payments.
- The 300 dollar per week bump in unemployment payments will be extended for an additional 11 weeks.
- Two other programs from the CARES act will be extended. This includes assistance to gig workers, freelancers, independent contractors and the self-employed. Also extended is a program that will provide an additional 13 weeks of unemployment insurance to those who have exhausted their state benefits.
- A second round of stimulus checks will be issued to people at certain income levels. Those making less than 75,000 dollars per year will receive 600 dollars. Those making between 75,000 and 99,000 dollars will receive a reduced amount. Those making 100,000 dollars or more will not receive this benefit. Dependents will also receive 600 dollar checks.
- The bill extends until January 31 the eviction protections that were set to expire December 31. It also provides for 25 billion dollars that will go towards rental assistance for those who lost their jobs due to the pandemic.
Other Items of Note
- The package includes 8.6 billion dollars for vaccine distribution.
- The package includes 20 billion dollars for the purchase of vaccines.
- The package includes 3 billion dollars for payments to hospitals as reimbursement for health-care related expenses and/or lost revenue due to the pandemic.
- The package includes 13 billion dollars for an expansion to the food stamps program (SNAP).
We at VARC Solutions know that 2020 has been a difficult year for many businesses. Assistance from the Federal Government could go a long way in helping your business stay afloat during these trying times. Contact VARC Solutions to find out how we can assist you with determining if a PPP loan is right for your business.