The HEROES Act Will Remove Many Restrictions from the Paycheck Protection Program
As the novel coronavirus COVID-19 shows no sign of slowing down, especially in states like Alabama, where warm weather beckons visitors and residents to outdoor recreation, small business owners are understandably frustrated. Restrictions remain on how many people can gather in certain places at once, and some business owners choose to use caution even beyond official recommendations. Workers must choose between a paycheck and their physical health. It is not a good climate for business, even as demand for online purchases remains robust and people are eager to socialize in public. The federal government and state governments are providing economic stimulus packages to help workers and small businesses cope with a very uncertain near future. The most recent major piece of legislation that promises to offer relief to business owners affected by the COVID-19 pandemic is the HEROES Act. To find out more about how the HEROES Act can benefit you and your employees, contact an Alabama small business lawyer.
What Is the HEROES Act?
The acronym HEROES stands for Health and Economic Recovery Omnibus Emergency Solutions. The HEROES Act is an economic stimulus act meant to cover the second half of 2020, essentially picking up where the CARES Act left off. The full text of the HEROES Act runs more than 1,800 pages, and its ninth section deals with support for small businesses.
A Solution to Paycheck Protection Program Glitches?
The Paycheck Protection Program (PPP) came into existence as a provision of the CARES Act. As one might expect with a program created hastily in the midst of an emergency, it was notoriously buggy. The first round of funding ran out quickly; some of it went to businesses that were not even eligible for it. When small business owners finally received the funds, there were so many restrictions on how they could use them that the loans did little to protect them from creditors. To add insult to injury, borrowers were told, after they had received the funds, that the loan money would count as taxable income. In short, the loans caused as many problems as they solved; some recipients even considered returning the money.
The HEROES Act contains the following amendments to the PPP:
- PPP loans will no longer count as taxable income on the tax returns of small businesses.
- 25 percent of the program’s funds will be reserved for very small businesses, defined as companies that employ ten people or fewer.
- Loan recipients will no longer be required to spend 75 percent of the loan amount on payroll. They will have much more flexibility regarding how they spend the money.
- The terms for repayment have been extended.
Let Us Help You Today
The HEROES Act eliminates a lot of red tape, making it easier for small businesses to recover from the COVID-19 pandemic. The guidance of a small business lawyer is another essential element of recovery for your small business. Contact the Alabama business & corporate litigation attorneys at Cloud Willis & Ellis for help.