Paycheck Protection Program Gets Big Boost

The immensely popular Paycheck Protection Program quickly ran out of money. There are myriad questions and concerns about the program, but the bill that just passed the Senate which Politico has made available here pretty much just throws more money at the program $320 billion according to the Wall Street Journal and $310 billion according to the Washington Post.

Which Is It?

In the original bill the number $349 billion occurs twice. The first time it is the “amount authorized for commitments for general business loans authorized under section 7(a) of the Small Business Act “. The second time it is “for the cost of guaranteed loans as authorized under paragraph (36) of section 7(a) of the Small Business Act”

Those two things are the same number in the original act but this act changes the first one to $659 billion and the second one to $670.335 billion. I haven’t figured it out, so it is a comfort to me that either WaPo or WSJ or maybe both of them have it wrong.

You know how it is $10 billion here,$10 billion there pretty soon you are talking about some real money.

One Change In The Program

The one change in the program is that $60 billion is set aside for smaller banks, credit unions and community financial institutions. That is probably a good thing, as there is anecdotal evidence that smaller institutions are taking better care of the little people.

Mystery Remains

There is still no clarification on whether you will be able to deduct payments that are made with loan proceeds that are forgiven. We still don’t know what happens if you have not spent all the money by June 30. And maybe it would be good if there was more of an idea about how uncertain we need to be in order to qualify. For example, should a company with a large stash of cash be allowed in before they spend their rainy day fund?

Other Provisions

There is another $100 billion for the “Public Health and Social Services Emergency Fund”. I’ll leave the details of that to others.

I guess they will be hiring at the Small Business Administration as they are getting $2.1 billion in additional “Salaries and expenses”. SBA gets another $50 billion for disaster loans and $10 billion EIDL grants. Those ran out even quicker than PPP. Hopefully people won’t have to reapply.

Not Over

The bill still needs to pass the House and be signed by the President, but the reports are that it is a done deal. So they probably won’t want my suggestion as to where they can find another $170 billion or so.

Here Is An Idea

When the Joint Committee on Taxation scored the original CARES Act, the second highest revenue loser was a modification to the effective date on the limitation on excess business losses.

That section is a very high class problem. When President Trump said that the Tax Cuts and Jobs Act did not help him and that many of his wealthy friends were unhappy with the Act, there might have been some thought they he was indulging in some of his “truthful hyperbole”.

Then I learned from one of my sources that Code Section 461(l) was troubling the masters of the real estate universe who thanks to President Trump’s favorite deduction – depreciation – did not have to pay much in the way of income tax.

The provision in the CARES Act pushes the effective date to next year allowing amended returns and big refunds. I knew that the provision would apply to a very small number of people, but when I called JCT they could not tell me how many.

According to the Washington Post JCT with be issuing a report showing 82% of the benefit of the change goes to 43,000 taxpayers who make over a million dollars a year. Shahar Ziv referred to this as them getting average stimulus checks of $1.7 million

Wouldn’t it be great if the House sent the bill back to the Senate with 461(l) restored to its original state and another $170 billion for Paycheck Protection?

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