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The Senate passed a Stimulus bill last night.

It is sending it to the House and then onto the President.

If there are no further objections, it is expected that the bill should be made law by the first of next week.

Here is a brief summary of what the bill has to offer for small businesses:

Loans:

  1. Paycheck Protection Loans-Loans of up to 2.5 times your average monthly payroll costs. Loans have a max maturity of 10 years with interest rates not to exceed 4%
    o Proceeds must be used to cover payroll, mortgage payments, rent, utilities and any other debt requirement.

o There is a partial loan forgiveness feature to this loan but the amount forgiven is limited to the cost of payroll, mortgage interest, rent & utilities for a limited 8 week period.

o You do lose the loan forgiveness feature if you reduce your workforce during the 8 week covered period compared to other periods in either 2019 or 2020.
o The remaining balance (after reduction for the 8 weeks costs noted above) will still need to be repaid in full.

  1. Emergency Government Disaster Loans-SBA loans that require no personal guarantee (up to $200k).
    o Government will pay the principal and interest on the loan for the first six months.
    o Can get up to a $10,000 advance on the Grant when you apply for the loan while the paperwork is being processed.  
    o The advance must be used to pay payroll and is not required to be repaid.

Credits:

  1. Employee Retention Credit-A credit for businesses who’s operations were fully or partially suspended or remained open and sales were less than 50% for the same quarter in 2019.
    o Credit is equal to the employers share of the Social Security tax it pays (6.2%) on up to 50% of qualified wages (max of $10,000) paid to each employee.
    o Not available if you are taking the Paycheck Protection Loan noted above.

Deferrals:

  1. Employers can defer paying their share of the Social Security tax (6.2%) that would otherwise be due in 2020.
    o Will have to pay ½ back in 2021 and the remaining ½ in 2022.
  2. Self-employed can defer paying 50%of their self-employment tax that would be due for 202o.
    o Will have to pay ½ back in 2021 and the remaining ½ in 2022.

    Both not available if you are taking the Paycheck Protection Loan noted above.