The economic rescue package passed by Congress contains a number of provisions to aid small businesses in Maryland, including an expansion of the Paycheck Protection Program. Also included are a number of tax breaks and other funding sources, some of which are targeted to particularly hard-hit sectors of the economy.
Far and away the most significant program is the PPP expansion. Earlier rounds of the program, according to FederalPay.org, saw more than 86,000 Maryland businesses receive more than $10 billion.
Congress is pumping another $284 billion into the Paycheck Protection Program, with set-asides for low-income and minority communities.
The economic relief measure would also allow businesses to deduct expenses paid out of past and new PPP funds for tax purposes, revising existing IRS regulations.
Furthermore, the legislation provides $20 billion for Economic Injury Disaster Loans advance grants, which will provide up to $10,000 for businesses that remain severely affected by the pandemic-driven slowdown.
Live venues and theaters, which have been completely shut down or limited to a fraction of their regular capacity since March, are also getting $15 billion. The bill lists eligible businesses as live venue operators or promoters, theatrical producers, live performing arts organization operators, museum operators, and movie theater operators.
The live entertainment industry has been one of the hardest hit by the pandemic, with many storied venues already shutting down for good. Businesses desperately need the funds as they are likely to remain closed in most places through winter as infections remain elevated.
There’s no specific provision in the bill for restaurants, but they can benefit more than before from the Paycheck Protection Program.
For example, restaurants can tap into the PPP a second time at 3.5x monthly payroll. This compares with 2.5x for other industries. Eligibility puts a 300-employee cap per restaurant location, compared with a 300 allocation cap for other industries.
Tax deductions include certain business expenses paid with PPP loans, such as payroll, rent, mortgage interest, utilities and other allowable expenses. This applies to either a first draw or a second draw PPP loan.
Business meals will be fully deductible next year and in 2022, which is double the previous deductible amount.
The legislation also includes a fix lawmakers have been seeking to make for months, according to Bloomberg: a more generous version of the employee-retention tax credit for businesses that keep workers on their payrolls. The break gives companies an additional incentive to keep people employed as many firms still face revenue downturns but have run out of Paycheck Protection Program money or never qualified for it.
The credit is refundable against payroll tax liability, meaning that companies could get a check back from the IRS if they qualify for a larger tax break than the payroll taxes they owe.