Businesses are excited about the second stimulus bill, called the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, that was recently approved.
While it’s expected to help the economy and allow small businesses to stay afloat, entrepreneurs are still not aware of how it works and what kind of benefits it offers.
To help you have a better understanding of the bill, we have covered the benefits it offers.
Let’s have a look:
You Might Get to Save Tax Money
The introduction of the second bill means the expenses you covered with money from the Paycheck Protection Program are tax deductible.
According to the IRS, it’s considered double-dipping to use tax-free money (forgivable loan) to cover expenses that you discounted on your taxes. This made it very difficult for some businesses.
Moreover, there was confusion regarding grants received by small businesses under the Economic Injury Disaster Loan program. Such advances are usually taxable but the IRS remained silent on the matter. However, things now look great as the new bill solves both of these issues.
Neither Economic Injury Disaster Loan grants nor Paycheck Protection Program loans will be taxed. Plus, if you used this money to cover business expenses, you will have the option to deduct these expenses from your taxes.
This means you will get to save tax money. To be on the safe side, make sure to use the right accounting tool and get in touch with an expert.
You Might Qualify for Another PPP Loan
Do not worry if you already took out a PPP loan, you might be eligible for another loan given that you meet all the requirements.
The purpose of PPP loans is to help businesses cover expenses such as utility charges and salaries. You’ll qualify only if you’ve already spent the money you received from a previous loan or if you have plans on how you intend to spend it. However, unlike the first round of loans, the second round focuses more on very small businesses, i.e: startups with less than 400 employees or businesses that saw a reduction of at least 25 percent in gross revenue in 2020 compared to previous seasons.
If you are struggling to make ends meet then consider applying for a loan even if you have previously taken one.
The good thing is that these loans may qualify for full forgiveness. In addition to this, you might have the option to request more funds from your first loan if you did not originally receive or apply for the full amount you were entitled to receive.
Easier Forgiveness Process
The PPP forgiveness process is considered controversial and slow. Things, however, are going to change now thanks to a simplified process for loans of lesser value – $150,000 or less.
If you qualify, you will be able to apply for forgiveness by applying directly through your lender.
You Might be Eligible for a $10,000 EIDL Grant
Your business might be eligible for a big grant of $10,000 even if you couldn’t apply the first time or were turned down for any reason. The grant that doesn’t need to be paid back was very well received when it was first announced but dried down pretty quick.
However, the eligibility criteria this time is much more stringent. It mainly targets very small businesses located in low-income communities or areas that have suffered badly during the pandemic.
The purpose of the bill is to make it easier to manage your business. However, you shouldn’t solely count on it and still have to find other ways to prosper during turbulent times.
A great option during this increased digital phase is to go virtual and place your business on platforms like Brobia so that more people can find you! Try Brobia for free for 60 days and track your growth with our detailed analytics.
Together, we’ll keep our communities alive by helping small businesses thrive!