How the New Stimulus Package Impacts You

Here’s an overview of the new stimulus package – and a breakdown of how it is the same and different from last time.  I discuss second stimulus checks, $300 per week unemployment, a second draw PPP loan, and the how the EIDL $10,000 advance grant per borrower is back on the table.

Will I Get a $600 Stimulus Check?

Yes, the plan right now is to get those out as quickly as possible.  Some are reporting getting theirs the last week of 2020.  However, it will be a few weeks for direct deposit and checks to be sent to most people.

Unfortunately, the amount is half as much as last time—$600 per person.  If you’re married, filing jointly that would be $1,200.  You get an additional $600 for each dependent under the age of 17.

Let’s clarify that last part.  Adults dependents will not get a check.  Unfortunately, they did not fix this gap from last time.

Remember, all of this is based on your 2019 taxes.  You can use this calculator to look at your 2109 tax return and see how much you should get.

Speaking of people who will not get a check, the income threshold has been lowered.  For example, if you make around $90,000 annually or double that if you’re a married couple, then you will not get a stimulus check.

They cleaned up the previous problem for those married to someone without a social security number.  Yes, if you’re married to someone without a social security number, you can still receive your stimulus check.  Also, you can receive a stimulus check for each of your dependents.

What About the $2,000 Stimulus Check?

There are debates in Washington about another $2,000 stimulus check.  This would be in addition to the $600 stimulus check.  However, it’s unclear when this will happen, so join our Facebook group because I’ll update you there before I make a YouTube video.

Will There Be Extra Unemployment Benefits?

Yes, they extended PUA approximately 11-13 weeks.  To be clear, PUA extends unemployment benefits to those who are traditionally ineligible, such as independent contractors or the self-employed.  They also added an additional $300 federal unemployment benefit per week on top of what your state gives you.

It could take about two to three weeks for states to start paying out the extra $300 in weekly benefits.  This is because each state must reprogram their systems with new dates and payout amounts.  There won’t be a lapse in benefits, so you’ll receive everything you’re owed.

If you are unemployed from the start of 2021 all the way through late March to early April, then you can expect to receive an additional $3,000 to $4,000 total over the course of those weeks.  That’s because they extended the maximum number of available weeks of unemployment to 50 weeks.

There’s also a more strict back to work reporting policy.  Employers will have the ability to contact the state to report employees refusing to come back to work without “good cause.”  Who decides what is and isn’t “good cause” is unclear right now.

Remember, unemployment benefits are taxable income.  Whereas the stimulus checks are not taxable income.  To be clear, if you don’t want a surprise when tax season rolls around, then have taxes taken out of your unemployment.

Will There Be a Second Round of PPP Loans?

Yes, there is a second round of PPP loans available called the “Second Draw.”  This second round of PPP is available in a very similar amount as the first time around.  However, you need to prove you had three consecutive months during 2020 where you earned less gross income than during 2019.

Specifically, the SBA may require documentation like a profit and loss statement or gross receipts that show three consecutive months from 2020 and those same three consecutive months in 2019.  You need to demonstrate at least a 25% reduction compared to the same period in 2019.

What does that mean for the self-employed?  It’s time to get your paperwork together.  Print your bank statements from all 24 months during 2019 and 2020.  Then, highlight on those statements every time you deposited revenue.

If you use software or a website that generates a profit and loss statement, then this is going to be an easy task for you.  Either way, you need to gather your documentation, so you are ready to apply for this PPP Second Draw.

If approved, you can expect the same amount as the first round of PPP.  Again, for the self-employed it’s 2.5 times your average monthly payroll.  You can check your correct PPP loan amount by accessing my free calculator spreadsheet here.

The owner’s compensation rules for sole proprietors is supposed to be same as the first round, so 100% of the second PPP loan will be available as owner’s compensation for self-employed individuals.  There are slightly different calculations and details for C-Corps, S-Corps, and partnerships, but you can expect the same loan amounts as last time.

What are the New Rules for PPP Loan Forgiveness?

They also changed the forgiveness rules for the first round of PPP loans.  Yes, there is another PPP loan forgiveness application with different rules.  I’m serious…this is like the fourth PPP loan forgiveness application.

The SBA still needs to create this forgiveness application, but it’s supposed to be one page.  All PPP loans $150,000 and less will be forgiven when you sign your name and certify you used the money properly.  This is essentially automatic forgiveness and almost sounds too good to be true.

The way the law is written you sign this one-page forgiveness application claiming you did everything right, your numbers are right, you stuck to the requirements, and then your loan gets forgiven.  They aren’t supposed to ask for any additional documents or paperwork.

However, the SBA still needs to implement these new rules. As always, as soon as new guidance from the SBA becomes available, I will make a video walking you through how to fill in that new PPP loan forgiveness application.

Is the EIDL Grant Still Available?

Yes, the EIDL advance grant is back on the table in the full $10,000 amount.  To be clear, the SBA still needs to implement this properly, but the EIDL advance is essentially free money provided to businesses that meet the requirements and apply for it.

The first round of this grant was supposed to be $10,000 per business, but the SBA decided it was only going to give $1,000 per employee.  For example, if you were a self-employed individual, you were only given $1,000.

The way the new language reads the full $10,000 EIDL advance grant will be available per borrower.  Honestly, I don’t trust the SBA to do this properly, so be prepared for more unnecessary confusion.

If you received that initial $1,000 EIDL advance, then you can apply again and get $9,000.  I recommend being ready to apply as soon as the SBA opens this up.  This is a $10,000 grant that does not need to be paid back.

Also, keep in mind the EIDL loan is available too.  This is a 30-year loan at 3.75% that you can use as working capital for operational business expenses.  This is in addition to the EIDL advance.

One last rule change going back to PPP loan forgiveness.  EIDL advance grants will not be deducted from PPP loan forgiveness amounts.  Previously, the SBA deducted your EIDL advance amount from your PPP loan forgiveness amount.  That is no longer the case.

Okay, let’s recap.  Many Americans can expect a second stimulus check in the amount of $600.  Adult dependents are left out again.  There is discussion of more stimulus money in the amount of up to $2,000 per person, but nothing is official yet.

Unemployment benefits were extended an additional 11 to 13 weeks for a maximum of 50 weeks.  There will be an additional $300 per week paid by the federal government on top of what your state provides.  Employers are supposed to report employees who are not returning to work unless employees provide “good cause,” but we still need clarification on what “good cause” actually means.

A second round of PPP loans is real.  You’re going to need show a 25% loss for three months of 2020 compared to your gross revenue during those same three months in 2019.  The amount of this PPP second draw will be the same 2.5 times your average monthly payroll as the first round of PPP loans. You should be able to “pay yourself” in the same way, but the SBA needs to provide more clarification.

The EIDL advance grant is back on the table for small business owners.  This is the full $10,000 amount that does not need to be paid back.  If you are interested in applying, get ready because it is first come first serve.

Please share this new website of mine with one person in your life.  It’s full of blogs, podcasts, and videos all about stimulus money and personal finance resources. 

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As always, I’m Rich and until next time.

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