Stimulus
The pandemic aid bill contains $285 billion for additional loans under the Paycheck Protection Program — the government’s small-business program created under the CARES Act — through March 31, while doing away with the restriction that left more than $100 billion unspent over the summer. The New York Times’s Stacy Cowley reports on what we know based on outlines of the bill circulating among congressional officials on Monday:
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The new relief bill offers a second cash infusion for those who meet stricter terms: Borrowers with fewer than 300 employees that had a 25 percent drop in sales from a year earlier in at least one quarter could qualify for an additional loan of up to $2 million.
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Hotels and food-service businesses are eligible for bigger loans this time, up to 3.5 times their average monthly payroll. Other borrowers would again be limited to 2.5 times their payroll.
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Publicly traded companies are ineligible for the new loans, eliminating a provision that provoked a public outcry as deep-pocketed restaurant chains, software companies and drug makers, among others, collected taxpayer-funded loans.
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The new bill expands the list of expenses that a loan could be used to pay, which previously were limited mostly to payroll, rent and utilities. Businesses could now use the money to buy supplies from their vendors, buy protective equipment for their staff or fix property damage “due to public disturbances,” according to a House Small Business Committee summary.
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The plan would allow business owners who received loans in the program, which are tax-free, to claim deductions for expenses they paid for with loan proceeds.
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The bill would also allocate $50 million to the Small Business Administration for audits and other efforts to address fraud in the program, which was a significant problem in the first round of funding.
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The bill includes other aid measures that are not specifically part of the Paycheck Protection Program but could nonetheless help many small businesses. Those include a $15 billion grant fund for closed theaters, museums, zoos and live event venues, and $12 billion for Community Development Financial Institutions, which make loans and grants to people and communities that are often unable to get traditional banks to do business with them.
