With the recently proposed HEALS act now making its way through Congress, it appears fairly certain that a second round of stimulus is on the horizon. The details are not yet settled, but we can draw some conclusions about what this could mean for your business.
The proposed legislation includes an expansion of the Paycheck Protection Program (PPP). The focus of the proposed expansion are smaller businesses hardest hit by the economic downturn. The proposal would restrict a second draw of funds for businesses with less than 300 employees who have experienced at least a 50% reduction in revenue. This loan could be as high as 2.5 times annual payroll. The loan would now be forgivable if 60% of the funds are used on the payroll. Seasonal businesses may also have access to loans up to 20 years at 1%.
The previously-introduced Employee Retention Tax Credit would change in a few ways. The refundable payroll tax credit increases from 50% to 65% and the gross receipts requirements drop from 50% to 25%. The total amount that can be claimed is also proposed at $30,000.
The proposal also includes an incentive to hire individuals who have been put out of work by the COVID-19 pandemic under the Work Opportunity Tax Credit. Other aspects include temporarily raising the meal deduction from 50% to 100% and providing a liability shield for employers such as schools and health-care providers when individuals have had exposure to COVID.
So what does this mean for your business?
- Start planning now-There is no need to wait for the details of the final legislation. You can have multiple contingency plans on how to move your business forward during this time.
- Get your financials together-As we saw with the opening of the PPP, being able to apply quickly and accurately could mean the difference between getting a loan and not. Sit down now to gather your paperwork and understand the financials needed to make an application.
- Plan for Employee safety-If new PPP money or a general turn in the economy means you have more employees in your buildings, plan now how you will protect them. Do you need additional equipment? What technology improvements will be needed?
- Have your business records in order-With any federal loan application it is important you have a well-documented business. For smaller businesses or sole proprietors, this sometimes takes a backseat to running a profitable business. Now is the time to get your business records in order.
Revolution Law Group is located in Greensboro, NC serving individuals and small businesses throughout the Triad and surrounding areas. To contact us please visit www.revolution.law or call 336-333-7907.
The information included here is for informational purposes only, is not exhaustive of all considerations when creating documents, is not intended to be legal advice and should not be relied upon for that purpose. We strongly recommend you consult with an attorney and do not attempt to create your own documents.