A financial expert breaks down the 2nd cycle of PPP loans
MADISON, Wisconsin (WMTV) – The federal COVID-19 relief bill would provide more than $ 300 billion in assistance to small businesses, if enacted.
President Donald Trump took to Twitter on Tuesday to express his frustrations with the bill, demanding that Congress make changes such as increasing out-of-pocket payments.
As the Covid presented new challenges to the child care industry, Corrine Hendrickson has experienced a whirlwind of emotions since the start of the pandemic.
“Nervous, scared, worried,” she said, “Would I reopen? Would I like to be able to reopen?
Hendrickson operates his own in-home daycare, Corrine’s Little Explorers. It aims to provide children with a fun and safe environment and to provide parents with peace of mind.
“My love for children and just being able to support them through their development, those early years, it becomes a family,” she said.
Hendrickson had to cancel his preschool program to comply with covid precautions. It is a change that reduced income.
“I know a lot of people will put things on credit cards. I know a lot of people are struggling, ”she said.
The nearly 6,000 pages Covid-19 Relief Bill, with the second round of PPP loans, aims to relieve small businesses.
Stephan Mesdjin, senior director of Berdnt CPA, said he thinks the new bill is a more targeted approach as opposed to a “one size fits all” for companies. He said the PPP loans will allocate additional money to the hardest hit industries, such as bars and restaurants.
“You must have reduced income compared to 2019,” Mesdjin said. “There are special rules for new businesses that opened in 2020.”
Navigating if you qualify starts with comparing salaries.
Do you have less than 300 employees? Was there a 25% drop in a quarter between 2019 and 2020? If you answered yes to both, you are eligible for a second P3 loan.
“A lot of companies who know they have been crushed by the pandemic know they are going to be eligible for the second round,” Mesdjin said.
If the loan is repayable, it is not taxable income. In addition, the loan amount will not be included in the gross income.
In some cases, there is a loan forgiveness. If you spend the money on certain expenses, you don’t need to repay the loan. Some of the expenses eligible for loan cancellation: payroll, rent, interest on loans, and protective gear for employees.
Experts urge small businesses to consult with their financial advisors to make sure you get the most out of the stimulus package, if it is enacted.
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