Second Stimulus Update: We Are Getting Closer...
Okay okay okay. Before we get too excited, THIS IS PROPOSED. Nothing is final, but it’s a huge step closer.
At the end of July the Democrats and Republicans were 2 TRILLION dollars apart in their goals.
Earlier this week Democrats came out with a new proposal that cut 1.2 trillion to their plan to make this happen.
Notable cuts:
$480 Billion cut towards state and local aid
$190 Billion cut towards hazard pay for front line health workers
$100 Billion cut towards hosing rental assistance for hospital workers
$54 Billion cut towards aid to homeowners (to help with mortgages, property taxes, etc.)
$10 Billion cut towards US Postal Service
This is not a political post or opinion piece, its simply an update. It’s also not a comprehensive update, there are many pieces to the bill and these are just some highlights.
Alright let’s do this…
Proposed Stimulus Checks
Same as before $1,200 each & $500 per dependent – subject to the same income limits.
One update: now the dependents are not limited to being only 17 years old whoop!
Both sides agree on this, we have every reason to believe this will be a permanent part of the bill.
Proposed PPP Updates
P4 Loans (second round of PPP loans)
This is for a SECONDARY PPP loan AND for those who missed out the first time around.
It’s slightly more difficult to obtain, you have to show a loss of at least 25%, have less than 200 employees and excludes publicly traded entities.
UNKNOWN: It doesn’t state the amount in secondary loans each business could get. I don’t know if its based on 2.5 months again, or something else.
Streamlined Forgiveness for loans under $150k!!!
I really really reallllllly hope this part gets passed (can you tell?)!!!
Note: All recipients of the PPP loan need to internally hold onto supporting documentation in the case they are ever questioned (think: payroll reports, rent payments, etc. and if you are a schedule C filer then simply your tax return).
Loans less than $50k, check a box that you certify you’ve met requirements and hold onto documentation. THAT’S IT!!
Loans from $50k-150k must submit a certification to the lender (again, basically check a box) and us the EZ forgiveness application.
Loans over $150k must go through the long ugly (but still well worth it) loan forgiveness process.
MY THOUGHTS ON PPP UPDATES: I think that it has been pushed on both sides to get forgiveness to be easier. It eases work on the SBA to review smaller loans and streamlines the entire process. Their time is much better spent on the bigger fish who got larger loans IMO.
EIDL Proposal Changes
Transparency in the data, more disclosures to the public of this funding – aka people felt mislead on where the funds were going, and this could help with that.
Possibility of loan holders to apply for hardship which could defer payments out for 4 years or reduce interest on the loan!
The max amount changes from $200k to $2MIL. Businesses previously capped at $200k could go back and get more.
PPP/EIDL EXCITING UPDATE!
You know how you were supposed to reduce your PPP by the EIDL grant money that you received? For example, if I got a $10k PPP loan but previously received an EIDL advance grant of $1k – then only $9k was forgivable?
WELL! In this proposed bill, it looks like they want to remove that silly rule altogether! That means you can apply for the full amount regardless of the grant you received ($1k per employee)!!!
NEW SBA Lifeline Grant Program
This is a brand new PROPOSED grant for those applying for the EIDL loan of up to $50k for businesses with less than 50 employees and economic loss of at least 30%.
It can be used for the same expenses as EIDL, to repay PPP or EIDL loans and towards expenses if you had to strategize surviving in the pandemic (like…investments towards pivoting your business!).
The bill proposes $40 billion to grants … sadly, this is not a lot, so keep an eye out if it opens (I’ll be posting about it).
Unemployment
Extension of providing $600 per week starting September 6th – January 31st, 2021 with a phase out through March 31st, 2021.
My thought: I think it’ll be more like $300-$400 a week – Republicans appear stern that they won’t be allowing as high as $600.
Side Hustle Benefit
Do you have a job AND self employed business?
They proposed providing $125 per week to individuals who have at least $5k a year in SE income but disqualified from receiving PUA because they were eligible for regular state unemployment benefits.
NOTE: this was a tiny section (Title IV Section 601) in the plan that didn’t go into detail. I’m sure there’ll be more clarification if this passes.
Federal Student Loan Repayments
Extends the deferral of payments through September 30th, 2021 and possibility of no interest accruing.
State and Local Tax Deduction
Previously they proposed that the $10k cap on itemizing state and local taxes on your tax return be removed for 2 years.
Now its reduced to one year…whatever I’ll take it. This is good news for states like OR and CA who are paying substantial state taxes.
Alright…what’s next? When do I get my money?
Well, the final day of the Senate session is October 9th. However, the house plans to postpone the start of their next break (which is supposed to start on October 2nd) until a deal is reached.
In other words, many things could happen (postponing breaks, calling senate back early, etc.) to vote on the proposal in the next 2-3 weeks.
Having all that said, is it likely a bill will be signed into law by the President just days before the election?
I don’t know, 2020 is bananas.
Follow me on IG to stay updated: @kelliloocpa
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