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.
For more information on any of the above issues, please contact us or visit our Coronavirus hub at ksbarlevi.com