Even before the COVID-19 pandemic, around 70% of all business partnerships were shown to fail. But now, all across the country, businesses of all kinds are being forced to shut their doors — either temporarily or permanently — as a response to our current health crisis. While Florida has done everything possible to keep businesses open during this time, many organizations are still hurting as a result of a severely reduced tourism industry and an increased emphasis on staying home. But the newly signed COVID-19 relief package, which was passed by Congress just before Christmas, could bring some much-needed help to small businesses in the Sunshine State.
Despite the fact that the stimulus checks included in this relief package will likely not be in the amount of $2,000 apiece, many Americans can expect to see at least some financial help from the government within a matter of days or weeks. While over $2 billion in refunds and credits go unclaimed by U.S. businesses every year, many of the businesses in Florida are eager to take advantage of the more than $284 billion earmarked for the Paycheck Protection Program (PPP).
The PPP’s goal is to provide funding to small businesses in order to prevent layoffs — and although the first rounds of funding may not have gone completely according to plan, many business owners are chomping at the bit to get another chance at securing additional monetary assistance. Businesses that have obtained PPP funding before will be able to apply again; what’s more, they can also be eligible for (and receive funding from) more than one program this time. And since the new Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act has added rules and clarified questions pertaining to loan application and forgiveness, it seems like this process may be a bit more straightforward now.
Although the IRS collected $3.4 trillion in taxes during 2017, business owners may be glad to know that PPP loans are not treated as taxable income. Forgiven PPP loans are tax-exempt, but you can still take advantage of appropriate write-offs and tax credits if you use your PPP funding for certain expenses. In general, PPP loan applicants have anywhere between eight and 24 weeks to use their funds, if they’re approved, with at least 60% of the funding going toward payroll. New PPP loans are capped at only $2 million, rather than the $10 million cap we saw before, and the number of employees is also lower this time around (no more than 300 instead of up to 500). Businesses applying for PPP loans do need to show they’ve experienced at least a 25% drop in revenue from Q4 of 2019 to Q4 of 2020 to prove eligibility.
It’s true that the new COVID relief bill won’t come close to solving all of our problems. Those who are still on unemployment are experiencing massive hardship right now, and even if Congress does ever agree to send out $2,000 stimulus checks, that may not come close to covering all necessary expenses for many Americans. But it’s certainly a start — and it’s one that many Florida business owners would be grateful to receive.