Updated federal coronavirus loan program offers more relief, but not all Colorado businesses are eligible
The new congressional coronavirus relief bill now allows small businesses to deduct expenses paid for by forgivable Paycheck Protection Program loan funds and other federal grants
Frisco restaurateur Bob Starekow got some devastating news last week. His federal Paycheck Protection Program loan came with unexpected strings.
“My accountant informed me that due to the ‘income’ of the forgiveness portion of the PPP loan, I will owe $45,000 in taxes on phantom income,” Starekow, owner of Silverheels Bar & Grill and Kemosabe Sushi & Sake, said in an email on Dec. 15. “I would explain it better if I understood the IRS’s extreme position better.”
Taxes have been a sore spot ever since recipients of the federal small business loan began realizing that if their loan was forgiven — which made PPPs particularly attractive — the business could not deduct expenses normally allowed.
Congress overruled that IRS position on Monday evening by passing a new $900 billion COVID-19 relief package. And the sequel to the CARES Act brings back the popular small business loan program — with tweaks to keep the focus on smaller companies and limit the amount of the loan. Businesses that received aid the first time around can apply for a second dose of relief.
“There’s a lot of businesses in our communities that are hurting and needing help. I think we’re going to see high demand,” said Justin Menge, executive vice president for commercial and industrial business at Alpine Bank in Glenwood Springs. “I think this is going to be similar to round one, where it was a rush for funds.”
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