The first Corona virus stimulus bill provided much needed relief for E-2 visa holders. Many E-2 visa companies were struggling and both the PPP loans and the EIDL grant kept many E-2 businesses afloat.
You can find out more about Covid immigration resources, the first round of PPP, and EIDL funding by clicking here.
What is New?
Congress just passed a second stimulus bill and there is good news for many E-1 and E-2 businesses. This article summarizes the key impacts of the stimulus bill on E-1 and E-2 visa holders, and their businesses. The key features are as follows:
- Simplified round 1 PPP forgiveness process if your loan is under $150,000. The old process involved the submission of a significant amount of paperwork and forms, and the new process will just require a certification.
- The PPP loan forgiveness is now completely tax free. After round 1, the IRS imposed a policy that disallowed any deductions where PPP money was used to fund the expense. This in essence made the PPP loan fully taxable. Congress has changed this and now these deductions are permitted making the entire loan tax free.
- The EDIL grant is now tax free. The SBA gave $1,000 per employee grant. This was taxable prior to the stimulus bill, but is now not taxable.
- The EDIL grant does NOT reduce the amount of the forgivable loan. In the past, if you say received a $100,000 PPP loan and also a $10,000 grant, only $90,000 of the loan could be forgiven. Now, the full $100,000 can be forgiven. Also, as stated above, the grant is tax free.
- A new round of PPP funding will be introduced. If your gross receipts (likely revenue) dropped by 25% in any quarter in 2020 (as compared to 2019) you can apply for another forgivable PPP loan.
- The loan amount will be based on a similar calculation as the first round where you look back at an average of the salaries paid over 2.5 months.
- The new loan will also be forgivable and not taxable
- Meals will be 100% deductible when purchased in restaurants for 2021 and 2022. (limited ability to deduct in the past)
- The list of things you are permitted to spend the PPP money on have expanded slightly.
These are all welcomed provisions and will help negatively impacted small businesses. When the Congress passed the bill, it was not clear if the President would sign it. (although, even if the bill was subject to a veto, the bill passed with enough votes to override a Veto.) Thankfully, the bill was signed on December 27th and is now law.
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