Hours after President Donald Trump signed a new COVID-19 stimulus package on Sunday night, Brock Blake began to see a wave of new interest in the Payment Protection Program loans.
“There is definitely an appetite,” said the CEO of Lendio, a small business loan broker that links companies with creditors. “Small business owners are in a very difficult situation.”
Still, while the United States Treasury Department and the Small Business Administration work out the details on how to get more relief money, Blake hopes they will take some time to get it right.
“I realize that everyday is essential now, with business owners in need of capital,” said Blake, whose company managed $ 8 billion to 100,000 businesses during the initial Payment Protection Program financing rounds. “But last time, the first few days were such a disaster that nobody knew what they were doing and there was very little guidance. … I hope that now that we all go through this once, we have some important learnings, and I hope that they map all the guidelines directly, in the beginning, even if it takes a few extra days. “
With the end of 2020 approaching, the moment remains a big question about the $ 900 billion stimulus package, which will provide $ 600 in checks for many Americans and $ 284 billion in loans for small businesses.
The law requires the Treasury to distribute funds “as quickly as possible”. For $ 600 payments, that means January 15th at most. Those who signed up for direct deposits from the IRS can see them next week; those who received them in the mail last time will have to wait a little longer. (The IRS created a tool this spring to sign up for direct deposit, but it is currently undergoing maintenance as the office prepares for increased payments.)
Those who do not receive a payment – but believe they are entitled to receive it – will be able to claim what is called a “recovery allowance” in their next 1,040 tax forms. This applies to both last spring payments ($ 1,200 per person, $ 2,400 per couple, plus dependents) and new payments ($ 600 per person, $ 1,200 per couple, plus dependents).
For Paycheck Protection Program loans, the Small Business Administration has 10 days from Trump’s signature to create and clarify new guidelines and applications. That would be around the 6th of January.
Blake said Lendio is already collecting applications for the first borrowers and expects the first money to arrive around 10 January. Those looking for a “second balcony” loan will have to wait a little longer. Either way, companies will have to incorporate new federal requirements, including proof that their business has decreased by at least 25 percent from a quarter in 2019 to the same quarter in 2020.
“Although we are gathering the applications, we are not yet submitting them to the SBA for approval,” said Blake. “We are gathering them and queuing them up and, as soon as they give us the green light, we will send them.”
The new law also extends until 2021 some time-sensitive stipulations of the Aid, Aid and Economic Stimulus Act (CARES).
For example, the CARES Act has increased the limit on allowable charitable tax deductions throughout 2020, giving people the ability to deduct donations worth up to 100% of their adjusted gross revenue (compared to 60% in previous years). It also allowed non-discriminators to deduct up to $ 300 per person, a rule that did not previously exist. Both rules were extended until 2021, which means that people who donate before and after the New Year must be able to claim these deductions this year and the next.
“Many people need that $ 600, but there are many people who don’t necessarily need it,” said Lutz financial planner Chuck Lewandowski. “Now you can use that money, if you’re inclined to charity, to get a deduction on top of your tax returns.”
Even before the new stimulus package, the tax cut paid dividends to several charities. The American Stage Theater Company in St. Petersburg tripled the number of charitable donors from 2019 to 2020, in part because of the provision of the CARES Act, said artistic director Stephanie Gularte.
“We are seeing significant increases in relation to year-end donations from previous years,” said Gularte. “Many people are looking to give within the fiscal year.”