After months of stalemate, on December 21st, 2020, Congress passed another relief package that allocated an additional $284 billion for the Paycheck Protection Program. The Paycheck Protection Program is a forgivable loan program designed to assist small businesses in weathering the costs of the pandemic.
The relief package legislation clarifies that businesses will be able to deduct expenses that were paid with loan money from the Paycheck Protection Program. The Internal Revenue Service originally announced it would disallow such deductions, but Congress clarified the deductibility to further help businesses.
Additionally, the relief package extends and expands Employee Retention Tax Credit. This provision encourages employee retention by allowing business to deduct 50% of an employee’s wages, up to $10,000 per employee. However, this credit is not available to businesses that received loan money from the Paycheck Protection Program.
Lastly, the relief package adds $20 billion for grants under the Emergency Economic Injury Disaster Loan (EIDL) program.
WHAT THIS MEANS FOR YOU
If you are a small business owner, independent contractor, or sole proprietor, you may have another chance to participate in the Paycheck Protection Program. Several of Lincoln’s banks have extensive experience with the program, so be sure to contact your lender to get the process started immediately. Further, your business may stand to gain from the above-described tax changes.
For additional information about the opportunities available to you under these stimulus packages, refer to our COVID-19 Resource Page or contact the attorneys at Rembolt Ludtke LLP. We look forward to serving you!