What to know about the $300 billion-plus stimulus bill for small businesses, and how founders will be able to apply for emergency funds

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David J. Phillip/AP

Annie Rupani is the owner of Cacao & Cardamom in Houston, Texas.

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Early Wednesday morning, the Senate and White House came to a bipartisan agreement on a $2 trillion stimulus package in an effort to recover and stabilize the American economy during the coronavirus crisis - and more than $300 billion of that is earmarked for small businesses.

The bill provides loans for small businesses and allows payroll-tax deferment in addition to direct payments to some citizens, a stimulus for the airline industry, and increased unemployment insurance.
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There are several provisions that could help small businesses struggling to stay afloat and keep workers amid nationwide closures and social distancing.

Here's how the stimulus package could help your business, and how to find out if you're eligible.

Payroll tax relief

Who's eligible: Businesses that continue to employ workers through the coronavirus crisis.
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The stimulus bill gives businesses tax credit and allows businesses to defer their payroll taxes so they continue paying employees.

Nicole Kaeding is the vice president of policy promotion and an economist at the National Taxpayers Union Foundation. She told Business Insider that employers can delay paying payroll taxes for 2020. They would then pay 50% in 2021 and the other 50% in 2022. "This is important because it gives small businesses in particular cash flexibility right now," she said. "The tax isn't forgiven, but they don't need to send the federal government a check right now."
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Employers who retain workers will be eligible for a new payroll-tax credit, including businesses that have been ordered to close as long as they keep workers employed throughout the crisis. However, it's important to note that employers who apply for small business loans will not receive the credit.

Kaeding also said in a Twitter thread that net operating losses (NOL) will be loosened for pass-through businesses, or businesses not subject to the corporate income tax.

Small business interruption loans

Who's eligible: Businesses with 500 or fewer employees who continue to employ and pay workers through the coronavirus crisis.
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The government will provide loans to small and mid-sized businesses to prevent lay-offs and continue payroll. Individual loans could be 100% of six weeks of payroll, capped at $1,540 per week, per employee, according to the Washington Post.

Garrett Watson is a senior policy analyst at the Tax Foundation, and he told Business Insider that the maximum loan amount is the lesser of $10 million or a company's average total monthly payroll cost for the year prior multiplied by 2.5. If a firm wasn't in business in early 2019, the cost would be calculated based on payroll between January 1 and February 29, 2020.

Senator Pat Toomey told NBC News that the funding for businesses will not be grant money, but loans they are responsible for repaying. Yahoo reported that there are provisions in the bill that would allow the loans to be forgiven in some cases and effectively become grants.
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The New York Times reported that the loans would be available during an emergency period ending on June 30, 2020.

How to apply: Applicants must verify the previous six weeks of payroll and later verify that they have paid employees for eight weeks after they received the loan.

The plan will rely on banks to facilitate the distribution of funding through the Small Business Association (SBA), as well as establish a new government lending agency. Additionally, the Federal Reserve announced that it plans to create a Main Street Business Lending Program to complement the SBA in lending to small and medium businesses.
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For businesses with existing SBA loans, principal and interest will be waived for six months.

It's important to note that the text of the bill is not finalized and small changes to language could occur, but Republican and Democratic leaders expect the Senate to pass the bill quickly.This post will be updated as additional details develop.
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