Virginia Business Community Praises COVID-19 Stimulus, but Seeks State Action for Full Benefits

  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
by Tyler Arnold

 

Virginia business advocates praised the COVID-19 stimulus package passed by Congress but said additional state action is necessary for businesses to receive the full benefits of the legislation.

The $900 billion COVID-19 stimulus provides about $325 billion in aid to small businesses nationally, including $284 billion for forgivable Paycheck Protection Program (PPP) loans, $20 billion for Economic Injury Disaster Loan grants, $15 billion for live venues, independent movie theaters and cultural institutions and another $12 billion for businesses in low-income and minority communities.

Congress’ bill also addressed a couple of concerns businesses raised regarding the first wave of PPP loans. The bill simplifies the forgiveness applications and makes the loans tax deductible at the federal level. The deductibility applies to loans that already have been received and any loans received in the second wave, which would prevent a hidden tax increase on businesses.

Virginia does not automatically conform its tax code to the federal code, however, which means state action would be necessary to ensure Virginia business owners receive the ability to deduct the loans on state taxes. The state usually conforms the state tax code to the federal tax code when it is in session. Gov. Ralph Northam’s administration announced its intent to do that this year but made the announcement before Congress included the tax deductibility.

“This [bill] would be a sizable relief for small business owners in Virginia,” Nicole Riley, the Virginia state director for the National Federation of Independent Business, told The Center Square. The NFIB is the largest small business association in the country.

Riley said the NFIB welcomed the second wave of PPP loans at a time when businesses were struggling and unsure whether they’ll be able to continue offering services. She said the deductibility provision and the simplification of the forgiveness applications cleared some of the challenges businesses otherwise would be facing.

The NFIB is asking the General Assembly to fully conform its tax code to the federal code so businesses can receive the full benefits of the deductibility.

Robert Melvin, the director of government affairs at the Virginia Restaurant, Lodging & Travel Association, made similar comments. He said the federal legislation singles out restaurants and hotels by allowing them to apply for up to 3.5 times their monthly payroll with the PPP loans, which he said will help those businesses that have been the most harmed by COVID-19 restrictions. It also creates a temporary 100% business deduction for meals.

“Federal relief has been a real lifeline,” Melvin said.

Melvin said he supports the state fully conforming its tax code to the federal tax code so businesses get the full relief.

Riley and Melvin also said the state should avoid additional mandates on businesses because they already are struggling to make money. Melvin said much of the COVID-19 spread has occurred in private settings rather than within businesses that have been following health and safety guidelines.

Small businesses that already received PPP loans would be able to apply for additional loans in the second wave if certain conditions are met, such as the business having 300 or fewer employees, a 25% revenue decline in any quarter or having used or plan to use the money they received from its previous PPP loan. A business that has not received a PPP loan can apply if it has 500 or fewer employees.

– – –

Tyler Arnold reports on Virginia and West Virginia for The Center Square. 

 

 

Related posts

Comments