Late Monday night, December 21, 2020 Congress passed a new $900 billion stimulus bill that includes a second round of stimulus checks to individuals, an extension of unemployment benefits, an additional round of Paycheck Protection Program (PPP) loans, tax relief for small businesses as well a variety of school funding, vaccine and other public health related measures. On Sunday, December 27, 2020, President Trump signed the bill into law. The bill encompasses relief for Americans and businesses across many avenues and will also deal with additional legislation to fund the government for the next fiscal year.
We have gone through the package to identify and highlight key points that we believe are of the utmost importance and relevance to our clients.
Second Round of Paycheck Protection Program (PPP) Loans
- The new stimulus deal brings about a second round of PPP loans, with approximately $284 billion earmarked for the program. It also comes with expanded eligibility for 501(c)(6) nonprofits, such as local chambers of commerce, which were left out of the original program. Businesses with “severe” revenue reductions may apply for a second loan.
- PPP loan eligibility requirements include:
- Less than 300 employees
- 25% less revenue in any given quarter over the year compared to 2019
- For loans up to $150,000, businesses must have a certification attesting that the entity meets the revenue loss requirement. Loans exceeding $150,000 will likely need justifications and/or documentation.
- Borrowers must have received an original PPP loan and used all of the original funds.
- The loans will be given out through the Small Business Administration (SBA) as was the case with the first round of PPP loans and the forgiveness process and requirements will be similar. The maximum loan a business will be able to receive will be $2 million.
- For covered loans up to $150,000, the form for forgiveness will be simplified to a one-page document.
- You must apply by March 31, 2021 or until funds are exhausted.
Stimulus Checks
- Americans have been waiting patiently to see what kind of personal relief the new stimulus bill would provide. A second round of $600 Economic Impact Payments will be paid out to individuals making up to $75,000 per year and $1,200 for couples making up to $150,000 per year, as well as $600 for each child dependent. This means that a family of four will receive $2,400 in direct payments.
Tax Relief for Small Businesses
- Expenses paid for with PPP loans will be considered tax deductible, officially reversing an IRS decision made earlier in the year that would have seen some small businesses pay more in taxes. The ability to deduct expenses if paid for with PPP loans has been the focus of intense lobbying by small business groups.
- If your business’ first round of PPP has not already been forgiven at the time this Act was signed into law, there are added additional eligible expense types.
- Covered Operations Expenditures
- Covered Property Damage Costs
- Covered Supplier Costs
- Covered Worker Protection Expenditures
Economic Income Disaster Loan (EIDL)
- An additional $20 billion has been allocated for EIDL grants, date determinants changed to December 31, 2021.
- If you were given less than $10,000 in the first round of EIDL grants, you can expect the difference to be paid to you.
- You may need to request this payment. As a note, the SBA has 21 days to complete the research and provide the remaining amount.
Unemployment
- There will be an extension for federal jobless benefits for millions of unemployed Americans. This bill provides an additional $300 per week for all workers receiving unemployment benefits and covers up to 11 weeks of unemployment through March 14, 2021.
- An unemployment benefits program for contract and gig workers, which is also set to expire at the end of the year, will be extended over the same period ending on March 14, 2021.
The legislation will also provide approximately $25 billion in emergency assistance to renters, although it remained unclear how that money would be disbursed. Families will be able to utilize this if they are struggling to make rent and may have past due rent compounding itself due to COVID-19.
We are staying up-to-date as new legislation and regulations are passed. We are committed to keeping our clients informed on the latest updates regarding this bill. If you have questions or need assistance, do not hesitate to reach out to us.