Information from Principal(R)
The new year brings additional federal relief as the Consolidated Appropriations Act was signed into law on December 27, 2020. The legislation includes $900 billion in aid for businesses and individuals—and is said to be the fifth longest bill to be passed in the country’s history.
So, this business provisions summary helps break it down, along with this simple chart to review the relief options available. We’ll continue our analysis of this legislation and provide updates as the Small Business Administration (SBA) and Treasury communicate further details and guidance.
Key business provisions
Payroll Protection Program (PPP)
• The PPP received more funds and extends its application deadline to March 31, 2021. • A new PPP Second Draw Loan program provides a second forgivable loan up to $2M for certain smaller, harder hit businesses with an application deadline of March 31, 2021.
• New, eligible uses for PPP proceeds have been established, including money spent for personal protective equipment.
• Group life, disability, vision, and dental insurance costs can be included in calculating payroll costs.
PPP loan forgiveness
• Eligible expenses are tax-deductible, even if paid from the proceeds of a forgiven PPP loan.
• A simplified forgiveness application is available for loans of $150K or less.
• A borrower can decide what covered period to use—anywhere from 8 to 24 weeks from the receipt of the loan.
• Economic Injury Disaster Loan (EIDL) Advance grants will no longer reduce how much of the PPP loan is forgivable.
Other federal relief loans
• Additional funds are available for the EIDL Advance for certain businesses—and the covered period is extended until the end of 2021.
• The maximum loan amount has been increased for various SBA 7(a) loan programs.
• An extension of the subsidies is provided for various SBA loan principal and interest payments.
Extension of other benefits (CARES Act and FFCRA)
• Employee retention tax credit—extended through June 30, 2021, and the benefit available is expanded under the credit, including the availability of the credit (even if the business received a PPP loan).
• Payroll tax relief—for those employers who deferred withholding of the employee share of Social Security, repayment is not due until the end of 2021.
• Families First Coronavirus Response Act (FFCRA) paid sick and family leave—the tax credit is extended to March 31, 2021.