Welcome to the Small Business Rundown. Each day, we bring you stories that impact small business owners and their workforce.
Small Business News Highlights for May 14:
- Banks prepare to receive PPP loan forgiveness guidelines from federal government
- $120 billion left in unallocated PPP funds
- Employers allowed to claim tax credit for paying furloughed worker health premiums
Banks prepare to receive PPP loan forgiveness guidelines
“Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”
Banks and borrowers are awaiting the release of guidelines from the federal government on the requirements for turning Paycheck Protection Program (PPP) loans into grants. According to the initial terms of the legislation, small businesses that used 75% of PPP funds for payroll-related expenses within the first 8 weeks would be eligible for loan forgiveness.
As the 8-week mark nears for the first round of borrowers, the federal government is attempting to bring clarity to the forgiveness process after business owners and bankers alike have expressed confusion about what and who qualifies.
While the bill was originally intended to help keep workers on the payroll, expanded unemployment benefits have caused many people to choose to stay home instead of heading back to work.
$120 billion left in unallocated PPP funds
“If you are a small business and these are funds you need to keep your doors open please apply for it. There’s no shame in applying.”
At least one member of the House of Representatives is urging small business owners to apply for PPP funds, despite the concerns voiced by those who have already received the loan. According to a lawmaker from Utah, the PPP still has $120 billion in unallocated funds that is available to help keep small businesses open and employing workers.
SMBs can claim tax credit for paying health premiums for furloughed employees
“The employee retention credit is one of a few financial options available to employers as they deal with the effects of the COVID-19 pandemic.”
For small business owners looking to soften the economic blows dealt by the COVID-19 pandemic, claiming a tax credit for paying furloughed worker health premiums is an option worth considering.
New guidance from the IRS states that money spent paying furloughed worker premiums can be treated as qualified wages. The health plan expense must be paid or incurred between March 12, 2020 and January 1, 2021. Employers can claim a maximum of $10,000 per employee for all calendar quarters.