Senator Mitt Romney (R-Utah) speaks as bipartisan Senate and House members gather to announce framework for new coronavirus relief legislation at a press conference on Capitol Hill on the 1st December 2020.
Kevin Lemarque | Reuters
Senate Majority Leader Mitch McConnell, R-Ky., Overturned a new Covid-19 rescue bill hours after his proposal on Tuesday, leaving small businesses uncertain about their future.
Biparty lawmakers on Tuesday morning presented a $ 908 billion relief plan. The measure was dead in the water that afternoon, when McConnell rejected him.
The measure would have set aside $ 288 billion in assistance to small businesses, including providing businesses with a second round of loans under the Paycheck Protection Program – a forgivable loan program established by the CARES Act. this spring.
PPP loan recipients are generally eligible for loan forgiveness if they use at least 60% of the proceeds to cover salary costs. Those who do not meet the threshold may be eligible for a partial pardon.
McConnell’s veto sends lawmakers back to the drawing board, where they may have another opportunity to refine corporate relief.
Simply offering more P3 funding might not be enough for cash-strapped businesses, tax professionals have said.
“You’re going to have a group of people who are worried about receiving more PPP funding,” said Megan Gorman, founding partner of Checkers Financial Management in San Francisco.
“They haven’t received the advice they need for the first round, and they are wondering if they will be able to come out of this,” she said.
Senator Angus King (I-Maine) holds a chalkboard as bipartisan Senate and House members gather to announce framework for new coronavirus relief legislation at a press conference on Capitol Hill on the 1st December 2020.
Kevin Lemarque | Reuters
In addition to offering a second raffle for PPP loans, the proposal that was canceled on Tuesday would have ensured that aid recipients would not be taxed on the first round of forgiveness loans, and it offers a simplified forgiveness. for loans under $ 150,000, Rep. Josh said. Gottheimer, DN.J., Tuesday morning at a press conference on Capitol Hill.
He was among the lawmakers working on the proposal.
Over 5 million PPP loans – $ 525 billion in funding – were approved earlier this year.
The program encountered its share of difficulties during the year, in particular the regular deployment of the orientations of the Treasury and of the Small Business Administration in the form of “Frequently Asked Questions. “
Another bone of contention has been whether small businesses can deduct expenses covered by the loan.
All of this has created more confusion for businesses: Not being able to deduct expenses could inflate their paper income and increase their tax bill, tax professionals said.
The new framework lawmaker released on Tuesday mentions “deductibility”, but there are no details on how that would work out for small businesses.
Although small businesses could use the financing, they are reluctant to accept assistance which will lead to more complexity and uncertainty.
“They’re going to have post-traumatic stress disorder from this first round,” said Tony Nitti, CPA, partner in the RubinBrown tax services group in Denver.
“If they solve the problems of the first round, there will be more interest from the borrowers,” he said. “If people go into it knowing that there is a block discount for loans under $ 150,000, you’re going to see a lot of people sign up for it.
“But nobody wants to go through this process that we’ve been through again,” Nitti said.