$2 Trillion Stimulus Package: $300 Billion is Allocated For Small Businesses

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On Wednesday, the White House and the Senate agreed on a $2 trillion stimulus package to help stabilize the economy of the US during the COVID-19 pandemic. $300 billion of the package are designated to help small businesses, says an article.

The bill will be used to give loans to small businesses and provide payroll-tax deferment. Also, the bill includes direct payments to US citizens, an increase in unemployment insurance, and a stimulus for the airline sector.

There are a lot of provisions that may help small businesses that are struggling to survive the challenges from the COVID-19 crisis in the country. Also, this will help businesses keep their workers amid the country-wide business closures and social-distancing orders.

Payroll Tax Relief

Those who are eligible for this relief are businesses that are continuously employing workers amid the COVID-19 crisis in the country.

Through the stimulus bill, businesses will receive tax credits. Also, they will be allowed to defer payroll taxes. This will help them to continuously pay their employees.

The vice president of policy promotion and the National Taxpayers Union Foundation's economist, Nicole Kaeding, said that employers are allowed to delay the payment of payroll taxes for the year. Then, they can pay half of the amount due in 2021 and the other half in 2022.

According to Kaeding, it is important because small businesses are offered with particular cash flexibility. She cleared that the tax is not forgiven. However, they are not required right not to pay them to the federal government.

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The employers, including those who were given the order to close, are eligible to make use of the new payroll-tax credits. However, they need to keep their workers while the COVID-19 crisis is still on-going to avail of the credits. Also, those who applied for small-business loans will not be permitted to avail of the credits.

Interruption Loans for Small Businesses

Those who are eligible for this are businesses with 500 or below employees that are still employing those employees and giving their pay despite the COVID-19 crisis in the country.

The government will be giving out loans to small and midsize businesses. The purpose of the loan is to prevent these businesses to layoff employees. Individual loans may be enough to pay six weeks of the payroll of their employees capped at $1,540 every week, per employee, says a report from last week.

According to a senior policy analyst at the Tax Foundation, Garett Watson revealed that the maximum loan amount may be less than $10 million or a business' average total monthly payroll expense. The payroll cost should be calculated based on the business' payroll from January 1 to February 29.

Senator Pat Toomey sais that the funding for businesses will not be grant money but loans. The repayment of the loans will be the responsibility of the businesses that applied for one.