Congress voted yesterday to pass the second COVID relief package, the follow-up to the original legislation passed in March. In comparison to the $2 trillion CARES Act, this second relief package amounts to $900 billion, but includes a second round of stimulus checks for citizens, as well as other financial assistance that will impact the promotional products space.
According to NBC News, the stimulus package includes an extension of unemployment insurance and federal unemployment insurance. It will also include more than $284 billion in loans for businesses having trouble paying expenses and employees.
Businesses can apply for a second Paycheck Protection Program loan, after the government originally stopped taking applications in August.
This time, the loans would be limited to companies with fewer than 300 employees that have “seen drops of at least 25 percent on their revenue during the fist, second or third quarter of 2020,” according to CNN.
Furthermore, the amount a borrower can receive will drop from $10 million to $2 million, but will “give businesses more flexibility on how they spend the money and simplify the forgiveness process for loans under $150,000.”
Within that stimulus legislation, there’s one detail that could be even more appealing to businesses that received a PPP loan. Per Bloomberg, businesses could receive substantial tax write-offs as a result:
The Covid-19 relief package set for a vote in Congress would clarify that business owners can deduct expenses paid for with PPP loans, which can be forgiven by the government without incurring a tax. The deduction benefit could generate more than $100 billion in tax savings for business owners, according to Brookings Institution estimates.
The legislation would override Mnuchin and the IRS, who have blocked businesses from writing off rent, utilities and other business expenses paid for with tax-free money. The agency says the tax code prohibits that sort of doubling up of tax benefits.
The bill also extends the repayment deadline for employers that deferred workers’ payroll taxes under President Trump’s August executive action. The deadline is now end of 2021, rather than April 30, 2021.
That all has more to do with businesses themselves. But one additional provision of note for promotional products businesses is that the stimulus bill includes a $15 billion grant for live venues, theaters and museums that have lost at least 25 percent of their revenue.
Owners and operators of cultural venues, from Broadway theaters on down to dive bars that host rock shows, will be able to fight over a new pool of grant money from the federal government as part of the $900 billion stimulus package. https://t.co/psqHm7vqm0
— SFist (@SFist) December 21, 2020
This past year has been absolutely devastating to these businesses, many of which have had to shut down because they can’t host events or concerts. The bill, which would give a total of up to $10 million per business, is a difference maker for these venues trying to stay afloat.
If they can keep their rent up to date and lights on through widespread vaccination, when people can return to full-size (or close to it) events, then it will open back up the opportunity for creative arts customers to restock their merchandise offerings.
Artists who used to rely on touring have taken the pandemic as an opportunity to increase e-commerce usage, but once things return to the status quo, the merch table and gift shops will become the norm again.
President Trump is expected to sign the bill, which had overwhelming bipartisan support, into law in the coming days.
