WASHINGTON — While the $600 stimulus payments to individuals took center stage in the latest COVID-19 relief package, a wide range of other benefits are available to help small businesses around the country navigate through these tough times.
A key provision in the latest round of stimulus benefits involves the reversal of an earlier federal ruling that businesses would have to pay taxes on certain benefits received through the Paycheck Protection Program (PPP). This stimulus program pumped billions of dollars into the economy in 2020 and saved many businesses that otherwise would have been forced to close for good.
While the PPP loan program money has been a lifeline for many, as the funding qualifies for forgiveness, there had been a ruling by the Internal Revenue Service (IRS) requiring that taxes would be due on money received to cover certain business expenses — such as payroll — that otherwise would be deductible.
That earlier IRS ruling, according to Roy Littlefield IV, director of government affairs for the Tire Industry Association (TIA), "would have saddled borrowers with significant, unexpected tax liability."
"What this new act does is it reverses that decision," he said, "and it (determines) that expenses paid by Paycheck Protection Plan proceeds may be deducted as well."
Clearing up confusion about potential tax liabilities associated with PPP funding was a key benefit identified by the Auto Care Association (ACA) as well.
The latest federal stimulus package not only extends the PPP program but also provides $284 billion in additional funding. The program also opens the potential for businesses with fewer than 300 employees to apply for a second round of forgivable loan funding, Gabrielle Hopkins, vice president of federal affairs at ACA, said, adding this is important "because the pandemic has extended longer than any of us would have thought."
Businesses can continue to claim those expenses, as they traditionally have over the years, on their tax forms, even though the money came from the PPP program, she said. Otherwise, companies could have faced substantial tax bills at a time when they are just trying to keep their doors open.
"That is a really big deal," Ms. Hopkins said. "It really is a big relief to a lot of businesses that applied for the Paycheck Protection Program."
Anne Forristall Luke, CEO of the U.S. Tire Manufacturers Association (USTMA), pointed to one key measure in the overall relieve package that in her view impacts the tire industry directly.
The latest stimulus package provides funding for the motor coach industry that's been severely impacted by the pandemic, she said.
With many American's hunkered down and afraid or prohibited by law from congregating over the months, the motorcoach business has been brought to its knees with the vast majority of its workers losing their jobs.
While other aspects of transportation had been covered in previous stimulus measures, funding for the motorcoach industry did not take place until December.
The Corona Virus Relief for Transportation Services Act ended up providing $2 billion in relief for the motorcoach industry.
While this was the first time for funding for the industry, the American Bus Association (ABA), which represents more than 1,000 motorcoach and tour companies in the U.S. and Canada, blasted the help as not being enough.
"It is truly disappointing and shocking that once again Congressional leaders have failed to provide adequate funding for the motorcoach industry," ABA CEO Peter Pantuso said in a statement when the bill passed. "The private motorcoach industry has been the only form of passenger transportation ignored by Congress over the past 10 months of the pandemic."
Motorcoaches run on medium truck/bus tires, but those tires essentially have been parked for the past year as 90% of that business has been lost. Some 80,000 of the 100,000 workers in that sector are out of work.
There have been estimates that 40% of these companies could shut down permanently without proper aid, the ABA said.
"This industry has been hanging on by a thread since March," Mr. Pantuso said in December. "So many hardworking and talented employees have been furloughed and will most likely be permanently unemployed because Congress does not see the value of our industry."
The ABA is holding out hope that more funding will come after President-elect Joe Biden takes office.
"I know it's only a fraction of what many believe is going to be necessary to help ensure that industry survives the pandemic," Ms. Luke said about the funding.
"I think the major point is they are important customers of ours. We want to be supportive. We were disappointed that support for that industry had not been included in any previous stimulus package. We were very pleased to see that this time. And we hope to see it increase in the next one," she said.
TIA CEO Roy Littlefield III said a five-year extension of one particular tax break that was included in the stimulus package certainly will help members.
The Work Opportunity Tax Credit has been extended in recent years in one-year increments, but how has a five-year extension until Dec. 31, 2025. This program gives tax credits to companies that hire members of disadvantages classes.
The tire industry, Mr. Littlefield III said, has "really taken advantage of this work opportunity credit" over the years.
Qualified workers include veterans, vocational rehabilitation referrals, qualified ex-felons and recipients of certain government aid programs.
The U.S. Small Business Administration said the portal for additional PPP loan funding initially reopened Jan. 11 for some and continued to roll out for others opened Jan. 15. Plans were to have the service fully available by Jan. 19.
The program's portal was scheduled to open to lenders with $1 billion or less in assets for first- and second-draw applications Jan. 15. Full access to the portal for all PPP lenders is slated to occur Jan. 19 for first- and second-draw loan applications to the U.S. Small Business Administration.
SBA already has granted access to certain so-called community financial institutions, including certified development companies, microloan intermediaries, minority depository institutions and community development financial institutions.
"A second round of PPP could not have come at a better time, and the SBA is making every effort to ensure small businesses have the emergency financial support they need to continuing weathering this time of uncertainty," SBA Administrator Jovita Carranza said in a statement.
First-draw loans are for borrowers not receiving a PPP loans before Aug. 8, 2020, the SBA said. Second-draw loans are for small businesses with 300 employees or less that previously received a first-draw loan. These second-draw recipients must demonstrate at least a 25-percent reduction in gross receipts from comparable quarters in 2019 and 2020. They also need to have appropriately used any previously awarded money.
A company can receive a maximum of $2 million through a second-draw loan. More information is available at www.sba.gov/ppp and www.treasury.gov/cares.
