Small Business Action is Needed To Fight Gridlock
Gridlock in Congress persists and NFIB and its members are still in the fight urging members of Congress to put aside their disagreements and help small businesses before Congress adjourns this month. Small businesses need additional financial assistance to weather the continued economic crisis caused by the COVID-19 pandemic.
In an interview yesterday on FOX Business, NFIB President Brad Close said, “Small business owners are doing everything they can to help their employees, to help their community and their clients who come in the door. But for a lot of them right now getting through the winter is going to be very tough, so at least having access to a second round of PPP loans would be a huge help to those small businesses that are barely hanging on. ”
Eight months have passed since the onset of the COVID-19 health crisis and government-mandated business shutdowns and restrictions. Many small businesses are still struggling to survive, trying to help their employees, adjust business operations to protect customers and workers, and adapt to consumers’ new shopping habits. The NFIB Research Center’s latest survey of small business owners found one-in-five (20%) small business owners report that they will have to close their doors if current economic conditions do not improve over the next six months.
With the election behind us, NFIB sent a letter to Congressional leaders again urging action on the recovery provisions that have bipartisan support in the U.S. House and Senate – to assist small businesses before the end of the year. These include:
Allowing targeted secondary Paycheck Protection Program (PPP) loans
As state and local shutdown orders expand, small business owners need targeted financial assistance. More than half (52%) of small business borrowers anticipate needing additional financial support over the next 12 months. NFIB supports legislation in both chambers that would provide targeted financial assistance to small business owners in the form of secondary PPP loans.
Brian, an NFIB member in Oregon says, “We employ about 20 full-time employees and have struggled over the last several months with covid issues. We have lost some of our customer-base as some have gone bankrupt, we have lost business opportunities because of quarantines, and we have lost future potential business as companies postpone projects. All his combined and higher operating expenses has put an extreme burden on our company staying solvent. Please pass another round of PPP for companies that lost 35% or more revenue compared to last year. We desperately needed the first round and because of the extended duration of the pandemic, desperately need a second PPP.”
Restoring the deductibility of PPP loan forgiven expenses
In addition, small business owners must be protected from surprise tax increases. On April 30, after most businesses applied for PPP loans, the IRS issued Notice 2020-32, which disallows the deductibility of forgiven expenses. In November, the IRS reiterated their position disallowing deductibility of expenses in 2020 if a loan recipient “reasonably expects” forgiveness in 2021. These regulatory actions reduce the benefits of the PPP and increase complexity for small business owners, who will have to separate payroll and business expenses for certain weeks during the “covered period.” Without Congressional action, the guidance will amount to a surprise tax increase for millions of small business owners as they try to emerge from the pandemic and state and local shutdown orders. NFIB supports multiple bills that reinforce Congressional intent that PPP forgiven expenses should be treated as deductible business expenses.
Cristina, an NFIB member in California, says, “I am a tax professional and this affects not only my business but my clients’ businesses as well. I stand to pay several thousand dollars more in taxes unless I can deduct the expenses paid with PPP loan proceeds.” See what more NFIB members are saying about the importance restoring deductibility.
Streamlining the PPP loan forgiveness process
Small business owners need streamlined forgiveness and clarity in the PPP forgiveness process. The vast majority of borrowers (90%) have spent their entire PPP loan and are ready to apply for loan forgiveness. NFIB supports bipartisan legislation that simplifies the PPP loan forgiveness process, allowing small businesses who received a loan of $150,000 or less to attest to a good faith effort to comply with PPP loan requirements and obtain forgiveness.
Forgiving PPP loans and Economic Injury Disaster Loan (EIDL) emergency advance grants
Twenty-seven percent of those who received a PPP loan also received an EIDL emergency advance grant. These distinct programs received two different appropriations and are managed by two separate offices within SBA. By itself, the EIDL emergency advance is a grant, and recipients do not have to pay it back. However, small business owners are not allowed to benefit from both the EIDL emergency advance grant and PPP loan forgiveness. NFIB supports legislation from both chambers that would allow forgiveness for PPP loans and EIDL emergency advance grants, preventing small business owners with being left with unexpected PPP loan balances.
Reduce Uncertainty For Business Owners Battling One Challenge After Another
Small businesses cannot recover in an uncertain economic and legislative environment. The latest NFIB Uncertainty Index, the portion of NFIB’s monthly survey that measures future economic conditions, had its highest reading since November 2016. This high reading is likely driven by the election and uncertain conditions in future months due to the COVID-19 pandemic and government-mandated shutdowns.
NFIB remains committed to working with Congress and the Administration to help mitigate the unprecedented negative impact of COVID-19 on small businesses and pass legislation to help small business owners before the end of the year.
TAKE ACTION: Urge your members of Congress to put aside disagreements and: