After two weeks of tense negotiations and months of fits and starts, Congress on Sunday agreed to a new Covid-19 relief package, clearing the way for hundreds of billions in renewed aid for struggling small businesses.
"We are going to crush the virus and put money in the pockets of the American people," said House Speaker Nancy Pelosi (D-Calif.) in a statement, following the agreement.
It's not a second too soon, says Neil Bradley, U.S. Chamber of Commerce chief policy officer. "At a moment in which their viability was in question, this could be the lifeline that keeps those small businesses open," he says.
Members of both the House and Senate are expected to approve a roughly $900 billion stimulus package. The bill, which President Trump is expected to sign this week, offers a number of inducements including $600 stimulus checks for individuals, jobless aid on the order of $300 a week, and additional funding for struggling small businesses facing renewed lockdowns and surging Covid-19 cases. The two roadblocks in the deal talks--funding for state and local aid, favored by Democrats, and additional liability protections for businesses, a top priority for Republicans--have been dropped from the bill.
The deal almost got derailed when Senator Pat Toomey (R-Pa.), with the full support of his party, moved to prevent the Federal Reserve and Treasury Department from ever reinstating crisis-era programs similar to those it devised during the pandemic. Among others, the Fed launched the Main Street Lending Program, a low-interest loan offering for small and midsize businesses, which is due to sunset on December 31. The Cares Act contained $454 billion for the Fed to support its programs throughout the crisis. Eventually, lawmakers reached a compromise late on Saturday, which prevents the Fed from launching carbon copies of these programs in the future but still allows it to rekindle some version of the programs.
So what's actually in this package for small businesses? The legislative text isn't available presently, so the details are still fuzzy. Even so, according to a streamlined version of the bill provided by members of the House's Small Business Committee and a press release from Pelosi's camp, you can bank on a few things:
The law would reauthorize the Paycheck Protection Program--the Covid-19 relief program, which supported $525 billion in forgivable loans to 5.2 million U.S. businesses under the Cares Act--with roughly $284.5 billion in funding. First-time PPP recipients and those who've already received a PPP loan but experienced significant revenue losses in 2020 would be eligible. Eligible businesses with 300 employees or fewer would need to demonstrate a 25 percent revenue drop in any one quarter in 2020 compared with 2019. The maximum loan amount for second-draw PPP recipients would be capped at $2 million.
It isn't clear if first-time PPP recipients will be held to the same revenue-loss and size standards. Ami Kassar, the founder and CEO of MultiFunding, a small-business loan adviser in Ambler, Pennsylvania, doubts it, however, as there's nothing in the statute noting any changes to the program on these points.
The new stimulus package would, however, expand the slate of expenses eligible for forgiveness for new or preexisting PPP loans. The covered expenses would include personal protective equipment and the costs associated with conforming to Covid-19 safety standards, such as retrofitting a business's HVAC system. The new law would also simplify the forgiveness process for loans less than $150,000 to include a single, one-page form that requires businesses only to self-certify their application.
Live-venue operators, independent movie theaters, and cultural institutions can expect $15 billion in aid, while other hard-hit businesses in low-income communities would see around $20 billion in Economic Injury Disaster Loan (EIDL) advances, which were exhausted in July. The EIDL advance grants would still be limited to $10,000, but if a business didn't get the maximum earlier, it could reapply for additional aid.
There will additionally be carve-outs from the PPP for Community Development Financial Institutions and Minority Depository Institutions, as well as for businesses with 10 or fewer employees.
The stimulus is also expected to reauthorize the Employee Retention Credit, a refundable tax credit of 50 percent up to the first $10,000 in annual wages for each eligible employee. That program is scheduled to sunset on December 31. Should it get extended, it's widely expected to also become available to businesses that have PPP loans. Currently, the two cannot overlap.