On Tuesday, December 22, Congress approved $900 billion in federal COVID-19 assistance. The biggest take aways from this new legislation can be found below.

Paycheck Protection Program (PPP)

The new stimulus bill reopens the PPP program for any business that did not apply before and expands which types of businesses can apply for forgivable PPP loans, including 501(c)(6) non-profits, local news media organizations or housing cooperatives. The Paycheck Protection Program (PPP) is scheduled to reopen upon enactment of the new COVID-19 federal relief bill, with an additional $284 billion in allocated funding. Applications will remain open until funding is depleted or March 31, 2021, whichever occurs first. 

Expanded List of Expenses Qualifying for Forgiveness: The list of expenses that PPP funds can be used for that qualify for loan forgiveness has been expanded to include:

• Operations Expenses: defined as payments for business software and cloud computing services and other human resources and accounting needs that facilitate business operations;
• Supplier Costs: defined as payments to a supplier for goods that are essential to the operations of the borrower pursuant to a contract or purchase order in effect before the PPP loan is disbursed or with respect to perishable goods, in effect at any time;
• Worker Protection Expenses: defined as operating or capital expenditures to comply with public health guidance related to COVID-19, including things like drive-through windows and sneeze guards and the purchase of personal protective equipment (PPE); and
• Covered Property Damage Costs: defined as costs related to property damage or looting due to public disturbances in 2020 that are not covered by insurance or other compensation.

Loan Forgiveness Reduction: If you also received an EIDL grant, your PPP loan forgiveness will no longer be reduced by the amount of the grant.

Loan Forgiveness Period: The period for which expenses count toward loan forgiveness will begin on the date of loan origination and end on a date of your choosing that is between 8 and 24 weeks after origination.

Simplified Application: If your loan was for less than $150,000, there will be a simplified one-page application process for loan forgiveness.

Expanded Employee Retention Tax Credit 

The new law significantly expands the employee retention tax credit beginning on January 1, 2021. The credit expires on June 30, 2021. The prior credit was 50% on $10,000 in qualified wages for the whole year (or a maximum of $5,000 per employee). The new credit is 70% on $10,000 in wages per quarter (or a maximum $14,000 per employee through June 30th).

The new law also expands which employers are eligible. Prior to the new law, the employee retention tax credit applied only to an employer who experienced a decline in gross receipts of more than 50% in a quarter compared to the same quarter in 2019. Eligibility is now expanded to include employers who experienced a decline of more than 20%.

In addition, the employee cap under which it is easier to claim the tax credit has been raised to 500 employees from 100 employees. Now, employers with 500 or fewer employees can claim the credit for wages to paid to employees irrespective of whether the employee is providing services.

Employers can now also receive both the Employee Retention Tax Credit and a PPP loan, just not to cover the same payroll expenses.

Economic Injury Disaster Loan (EIDL) Program

The new federal bill allocates an additional $20 billion to the Economic Injury Disaster Grant Program. If you applied for an EIDL grant and did not receive the full amount you qualified for, you are now eligible to reapply for the difference between what you received and what you qualified for.

Note: We encourage businesses to contact their banker or finance professional for information on how best to proceed in their own individual situation. Visit the SBA’s coronavirus website to learn more about these and other relief options.

Loans from the U.S. Small Business Administration are administered through local banks and lenders. The SBA keeps an up-to-date list of available lenders on its website. Click here to visit the SBA site and see if your lender is on the list.