Small business relief: Finance expert breaks down 2nd round of PPP loans
MADISON, Wis. (WMTV) - The federal COVID-19 relief bill would provide more than $300 billion in aid for small businesses, if it’s signed into law.
On Tuesday, President Donald Trump took to Twitter expressing frustrations with the bill, demanding Congress makes changes such as increasing direct payments.
As Covid presented new challenges to the childcare industry, Corrine Hendrickson experienced a whirlwind of emotions since the start of pandemic.
“Nervous, scared, worried,” she said “Would I reopen? Would I want to be able to reopen?”
Hendrickson runs her own home-based childcare center, Corrine’s Little Explorers. She aims to give kids a fun, safe environment and parents peace of mind.
“My love for the kids and just being able to support them through their development, those early years, it becomes family,” she said.
Hendrickson had to nix her preschool program to fall in line with covid precautions. It’s a change that reduced income.
“I know a lot of people will put things on credit cards. I know a lot of people are struggling,” she said.
The nearly 6,000 page Covid-19 Relief Bill, with the second round of PPP loans, aim to give small businesses relief.
Stephan Mesdjin, Berdnt CPA senior manager, said he thinks the new bill is a more targeted approach as opposed to a “one-size-all” for businesses. He said the PPP loans will carve out additional money for harder hit industries, such as bars and restaurants.
“You have to have reduced revenues in comparison to 2019,” Mesdjin said. “There are special rules for newer businesses that opened in 2020.”
Navigating if you qualify starts with comparing wages.
Do you have fewer than 300 employees? Was there a 25 percent drop in any quarter from 2019 to 2020? If you answered yes to both, you qualify for a second PPP loan.
“A lot of the businesses that know they had been crushed by the pandemic, know that they’re going to be eligible for round two,” Mesdjin said.
If the loan is forgivable, it’s not taxable income. Also, the loan amount will not be included in gross income.
In some cases, there is loan forgiveness. If you spend the money on certain expenses, you don’t need to pay the loan back. A few of the expenses that qualify for loan forgiveness: payroll, rent, interest on loans and protective equipment for employees.
Experts urge small businesses to consult with their financial advisers to make sure you get the most out of the stimulus package, if it’s signed into law.
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