Hours after President Donald Trump signed a new COVID-19 stimulus package Sunday night, Brock Blake started seeing a wave of new interest in Paycheck Protection Program loans.
“There’s definitely appetite,” said the CEO of Lendio, a small business loan broker that matches companies with lenders. “Small business owners are in a very difficult spot.”
Still, as the U.S. Department of Treasury and Small Business Administration work out the details on how to get more relief money out there, Blake hopes they’ll take time to get it right.
“I realize that every day is critical right now, with business owners needing capital,” said Blake, whose company shepherded $8 billion to 100,000 businesses during initial rounds of Paycheck Protection Program funding. “But last time, the first few days were such a disaster that no one knew what they were doing, and there was very little guidance. ... I hope that now that we’ve all gone through this once, we’ve had some key learnings, and I hope that they will map out all of the guidance straight up, up front, even if it takes a couple of extra days.”
With the end of 2020 at hand, timing remains a big question about the $900 billion stimulus package, which will provide $600 checks for many Americans and $284 billion in small business loans.
The law stipulates that the Treasury disperse the funds “as rapidly as possible.” In the case of the $600 payments, that means no later than Jan. 15. Those who are signed up for direct deposits from the Internal Revenue Service could see them in the next week; those who got them by 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’s currently down for maintenance as the office prepares for the rush of payments.)
Those who don’t receive a payment — but believe they were entitled to one — will be able to claim what’s called a “recovery rebate” on their upcoming 1040 tax forms. That applies both to last spring’s payments ($1,200 per person, $2,400 per couple, plus dependents) and the 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 guidance and applications. That would be around Jan. 6.
Blake said Lendio is already collecting applications for first-time borrowers, and expects the first money to trickle through around Jan. 10. Those seeking a “second draw” loan will have to wait a little longer. Either way, companies will have to incorporate new federal requirements, including proof that their business declined by at least 25 percent from one quarter in 2019 to the same quarter in 2020.
“Even though we’re gathering the applications, we’re not submitting them to the SBA yet for approval,” Blake said. “We’re gathering them and queuing them, and as soon as they give us the green light, then we’ll submit them.”
The new law also extends through 2021 a few time-sensitive stipulations of the Coronavirus Aid, Relief and Economic Stimulus (CARES) Act.
For example, the CARES Act increased the cap on allowable charitable tax deductions throughout 2020, giving people the ability to deduct donations worth up to 100 percent of their adjusted gross income (compared to 60 percent in previous years). It also allowed non-itemizers to deduct up to $300 per person, a rule that did not previously exist. Both rules have now been extended into 2021, which means people who give before New Year’s and after should be able to claim those deductions both this year and next.
“A lot of people do need that $600, but there are a lot of people who don’t necessarily need it,” said financial planner Chuck Lewandowski of Lutz. “Now you can use that money, if you’re charitably inclined, to get a deduction on the top end of your tax returns.”
Even before the new stimulus package, that tax break had paid dividends for numerous charities. American Stage Theater Company in St. Petersburg has seen triple the number of charitable donors from 2019 to 2020, in part because of the CARES Act provision, said artistic director Stephanie Gularte.
“We’re seeing significant increases over previous years’ end-of-year giving,” Gularte said. “A lot of people are wanting to give inside the tax year.”