Congress passed the bipartisan COVID-19 Emergency Relief Act on December 21, 2020 and sent it to President Trump’s desk for signature. While the bill provides relief to a variety of areas in the economy, below is a summary of points that we have been asked about the most:
PPP Loan Program Additions and Modifications
The forgivable loan program first introduced from the CARES Act in April received a few changes in the new bill; most notably additional funds for a 2nd round of loans, streamlined forgiveness for existing loans under $150,000, and confirmation from Congress that expenses paid with loan proceeds will be deductible on a business’s 2020 tax return. While specifics are still being released below is a summary of the PPP updates so far:
- $300 Billion of total funds available for 2nd round of lending – $138 billion reinvested from the original program and $162 billion in new funding
- Eligibility for 2nd round of loans include new limitations:
- Eligible businesses can have a maximum of 300 employees down from 500 in the first round of funding
- Business must have experienced gross receipts decline by at least 30% for any quarter in 2020 compared to that same quarter in 2019
- Small 501(c)(6) organizations that are not lobbying organizations and that have 150 employees or fewer, such as local chambers of commerce, economic development organizations, and tourism offices, would become eligible for PPP.
- $15 billion is specifically allocated for performance venues, independent movie theaters and other cultural institutions devastated by the restrictions imposed to stop the spread of the virus.
- Business expenses paid for with the proceeds from PPP loans are tax deductible, confirming Congressional intent in the CARES Act
- Forgivable expenses are expanded to include supplier costs and investments in facility modifications and personal protective equipment to operate safely
- Applicants with existing outstanding loan balances up to $150,000 will require a one page application for forgiveness with borrower certifications
A second round of stimulus payments is also included in the bill, and Secretary Mnuchin said the payments could be made for some recipients as early as next week. There are a few changes from the payment amounts and eligibility from the CARES Act:
- Payments are reduced to $600 from $1,200 earlier this year, but include $600 for eligible dependents
- Single tax payers making more than $75,000, head of household taxpayers making more than $112,500, and married taxpayers making more than $150,000 will have their payments reduced, or not receive any payments at all.
Unemployment Benefits, Rental Assistance, and Eviction Moratorium
All Federal supplemental unemployment insurance benefits, which had already expired or would end on December 31, will be extended through March 14, 2021. However, the supplemental amount will only be $300 per week instead of the $600 that the CARES Act authorized. The plan would also extend the Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs, which expanded jobless benefits eligibility and allowed people to continue to receive payments after their state assistance ran out, through mid-March. The bill would also extend the federal eviction moratorium through Jan. 31, and would put $25 billion into a rental assistance fund, which state and local governments would allocate to people to use for past due and future rent or utilities payments.
Miscellaneous Additional Provisions
The legislation removes the 50% reduction of meals expenses, and allows for businesses to expense the full amount of money spent on dining for 2021 and 2022. The final proposal includes $69 billion for the distribution of a coronavirus vaccine and more than $22 billion for states to conduct testing, tracing and coronavirus mitigation programs. It will also provide $13 billion in increased nutrition assistance, $7 billion for broadband access, $45 billion for transportation and transit agencies and $25 billion in rental assistance.
Stay tuned, much more to come…