NEW ORLEANS – Fidelity Bank President Chris Ferris said small business owners should be cheering the passage of the new federal stimulus bill.
“There is a lot of great help … both from the standpoint of reforming the first round of the Paycheck Protection Program, which was plagued with a lot of confusion, and also offering struggling businesses with a second round of much-needed help.”
Perhaps the biggest change is that the government will offer blanket forgiveness to businesses that took out loans of less than $150,000 in the first round. Business owners only have to complete a short form that assures the government that they needed the funds and used them as intended.
Other big positive changes: small businesses can use up to 40% of their PPP funds for personal protective equipment expenses and restaurants can include all costs associated with outdoor dining.
Another big issue that has been resolved in this new relief law is that businesses can still deduct any and all expenses that were covered by the first round of PPP loans, said Ferris. Initially the government was going to tax the small business owners for their expenses that were covered by the PPP loans.
“If you already got a first PPP loan, you can do another second draw,” said Ferris. “But you have to have fewer than 300 employees, and you have to show a revenue reduction of 25% from year to year 2019-2020. That is unique to the second round of PPP. Publicly traded companies cannot get a second draw, which was approved to make sure the really small impacted businesses get this relief.”
Ferris said the second round still includes the mandate that 60% of the loan be used for payroll but “many small businesses have laid people off and their payrolls have shrunk.”
