New Relief Funding Bill Enacted
President Trump recently signed a new relief funding law that increases the amounts appropriated to the Paycheck Protection Program (“PPP”), the SBA—for more than just Emergency Economic Injury Disaster Loans (“EEIDLs”)—and emergency grants. Direct appropriations were increased from $349,000,000,000 to $659,000,000,000 for the PPP, from $349,000,000,000 to $670,335,000,000 for the SBA, and from $10,000,000,000 to $20,000,000,000 for EEIDL grants.
A business may apply for both a PPP Loan and an EEIDL, as long as the loans are not used for the same expenses and purposes during the same periods. For companies that receive a PPP Loan and EEIDL or an Emergency Economic Injury Grant, the amount received as an advance under the Emergency Economic Injury Grant will be deducted from any amount forgiven in the PPP Loan forgiveness process. Below are two helpful Q & As regarding this subject.
Other than the PPP Loan or the EEIDL, the new federal laws do not provide additional funding opportunities, it simply increases the funding amounts. The tax credit, tax payment deferrals, and loan payment assistance advantages, described in detail in Sutin’s previous alert, remain intact.
| QUESTION: | How does the PPP Loan coordinate with SBA’s existing loans? |
| Answer: | Borrowers may apply for PPP Loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP Loan for the same purpose as your other SBA loan(s). For example, a business that uses its PPP Loan to cover payroll for the eight-week covered period, cannot use a different SBA loan product for payroll for those same costs in that period; however, it could use it for payroll during a different period or for different workers. |
| QUESTION: | How does the PPP Loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program? |
| Answer: | Emergency Economic Injury Grant and Economic Injury Disaster Loan (EIDL) recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan as long as there is no duplication in the uses of funds. Refer to those sections for more information. |
(Both questions are from the U.S. Senate Committee on Small Business & Entrepreneurship’s “The Small Business Owner’s Guide to the CARES Act”)
Governor Amends Order for Businesses
Governor Michelle Lujan Grisham has announced her modified public health order, authorized by Health Secretary Kathy Kunkel and effective 8 a.m. Friday, May 1.
The order allows for partial re-openings for business operations deemed non-essential to health, safety and welfare. Cibola County, McKinley County, and San Juan County remain subject to the terms of the April 11 Public Health Emergency Order through May 15.
Non-essential retailers may provide curbside pickup and delivery services if permitted by their business license. Liquor licenses, for instance, do not allow for curbside or delivery service. Child care may now be extended to people operating non-essential businesses.
Additional changes include:
- State parks may reopen on a modified day-use-only basis, as staff is available. Camping and visitor centers are still closed. The Energy, Minerals and Natural Resources department will notify the public of the parks that will be open in the near future.
- Federally licensed firearm retailers may open by appointment only as needed conduct background checks and to allow individuals to take possession of firearms ordered online.
- Golf courses may open to golf only – no dine-in or retail service.
- Pet services – including adoption, grooming, daycare and boarding – are permitted to operate. Veterinarians are permitted to operate.
A separate public health order dated Thursday addresses New Mexico’s June 2 primary election by allowing polling locations to open with limits. The order says no more than four voters or 20 percent of capacity may be inside a polling place at a time; mobile voting units may have no more than two voters at a time.
A third public health order allows medical facilities to gradually resume non-essential but medically necessary procedures (including ambulatory and inpatient surgery) based on extensive guidelines from the Department of Health. The guidelines are designed to prevent a shortage of personal protective equipment and to safeguard the health of patients and healthcare workers.
The order does not amend the original directive that New Mexicans remain at home except for outings essential to health, safety, and welfare. It further reiterates that gatherings of more than five individuals are prohibited. Restaurants and dine-in outlets may provide only curbside and delivery service, as before. Grocers and other essential retail services must continue to operate at only 20 percent of their maximum capacity as determined by fire code.
IRS: Double Deductions Not Allowed Under PPP Forgiveness
The Internal Revenue Service issued guidance on April 30 (Notice 2020-32) that a deduction for otherwise deductible business expenses would not be allowed if the payment of the expense results in forgiveness of a loan under the Paycheck Protection Program. Under the CARES Act, the income associated with the forgiveness is excluded from gross income. The CARES Act was silent on the deductibility issue and a future stimulus package could address the issue.