Key points of the $2 trillion Coronavirus stimulus plan for small businesses
The US Senate has passed an historic $2 trillion stimulus package aimed solely at supporting American workers and businesses.
In addition to the headline $1,200 payments to be made to individual Americans, the key points of the 880-page bill aimed at supporting small businesses includes the following:
$350 billion available to small businesses, under the ‘paycheck protection program’
- In an unprecedented expansion of the SBA loan program, this additional $350 billion will be partially forgivableassuming the loan proceeds will be used for expenses such as payroll, rent & operating expenses for a period of eight weeks from the date of loan approval.
- Small businesses (loosely those with fewer than 500 employees) can each receive up to $10 million, based upon the business’s employee cost recorded between 1 January and 29 February 2020.
- The interest rate will be capped at 4%.
- Assuming the loans are used for approved expenses, the loan principal is forgiven – the borrowing company will only need to repay the interest element.
- The portion of loan funds used to cover salaries in excess of $100,000 will not be forgivable.
- Loans are to be administered by banks and other lenders in an effort to streamline the application process.
- It is thought that companies who have already laid off workers can still qualify for these loans, assuming employees are re-hired.
Deferment of employer payroll taxes
- Companies can delay payment of employer payroll taxes until 2021 or 2022.
Ability to carry back taxable losses
- The package relaxes existing rules on use of taxable losses for corporations – they will be able to carry back losses to trigger a refund of taxes paid in the previous taxable year.
The situation is fast-moving and details on the logistics and practicalities surrounding the application process are currently thin on the ground. We will provide updates as soon as they are made available.