After months of deliberation, Congress has reached an agreement on a second stimulus to provide relief to businesses and individuals adversely affected by the COVID-19 pandemic. The $900 billion pandemic relief is the second largest federal stimulus after the Coronavirus Aid, Relief, and Economic Security (CARES Act), approved in March. Several aid packages under the CARES Act are set to expire on December 31. Congress combined the new COVID-19 relief bill with the $1.4 trillion federal government spending bill that will fund government programs through September 30, 2021.
In addition to direct stimulus checks of $600 to individuals and enhanced unemployment benefits, the legislation includes almost $300 billion of Small Business Administration (SBA) funding for the Paycheck Protection Program (PPP), which had stopped taking loan applications in August. The following is an overview of the stimulus package highlights.
Small Business Loans
The stimulus includes $325 billion in aid to small businesses. Most notably, the PPP program is reopened with $284 billion in forgivable loans for small business borrowers, also making it possible for distressed businesses to get a second loan.
PPP2 specifics include:
- Maximum loan amounts of $2 million, with loans based on 2.5 months of payroll costs.
- Forgiveness for loans of $150,000 or less will be simplified, and expenses paid with PPP funds will be tax-deductible.
- PPP retains 60%/40% allocation between payroll and non-payroll costs for full loan forgiveness.
- Forgivable expenses will now include investments in facility modifications. PPE and other supplier costs to operate safely through the pandemic.
- $12 billion in additional PPP loans for minority-owned businesses and the smallest businesses, through community development financial institutions and a new Neighborhood Capital Investment program.
Other small business measures of the stimulus include:
- $20 billion for Economic Injury Disaster Loans (EIDL) for businesses in low-income communities.
- $15 billion for independent movie theaters, live venues and other cultural organizations. It also includes local newspapers, television and radio broadcasters.
- $3.5 billion will extend Small Business Administration (SBA) debt relief payments and $2 billion to enhance SBA lending.
- Businesses seeking additional PPP loans should immediately prepare by gathering financial data to support their need for more funding.
GPP’s COVID-19 Business Advisory and Planning Services professionals will work with businesses to examine:
- Comparative financial reports
- Number of employees
- Current operating expense levels
- Timing of the exhaustion of initial PPP funds
Employee Retention Tax Credit
- The legislation expands and extends the Employee Retention Tax Credit (ERTC) established under the CARES Act to help small businesses and nonprofits retain their workers and continue operations through the pandemic.
- The CARES Act provided $1,200 in stimulus checks to individuals. This legislation provides half that amount, with $600 stimulus payments sent to individuals with incomes up to $75,000 based on 2019 income and partial payments to those with incomes over that amount, with a complete phase-out for those making more than $87,000, compared to the CARES Act phase-out of $99,000.
- Eligible families will receive an additional $600 per child, a $100 increase from the first round of relief funding.
- Stimulus checks are expected to be distributed through direct deposit by the beginning of next week.
- Unemployed individuals will receive $300 per week in federal benefits for 11 weeks, from the end of December 2020 through mid-March 2021.
- The amount is a 50% decrease from the first federal boost, which ran out by the end of July.
- The new funding includes extensions of two other unemployment programs that were part of the CARES Act and scheduled to expire this month:
- Under the Pandemic Unemployment Assistance program, jobless benefits will be expanded to gig workers, freelancers, independent contractors, the self-employed, and specific other people affected by COVID-19.
- Under the Pandemic Emergency Unemployment Compensation program, individuals who exhaust their regular state benefits are eligible for an additional 13 weeks of payment
- Both programs will close to new applicants on March 14, 2021, and phase out in early April for existing claimants.
Vaccine Funding Highlights
- $20 billion to make vaccines available at no charge
- Nearly $9 billion for vaccine distribution
- More than $22 billion to states to assist with COVID-19 testing
Schools and Child Care
- K-12 schools and colleges will receive $82 million in aid, including assistance to help reopen classrooms safely.
- $10 billion is slotted to support childcare providers affected by the pandemic.
- Eviction protection is extended until January 31, 2021, which was set to expire on December 31.
- An additional $25 billion in rental assistance will be provided for individuals who lost their source of income during the pandemic.
Food and Nutrition
- Supplemental Nutrition Assistance Program (SNAP) benefits are increased by 15% for six months.
- $400 million to food banks and food pantries through The Emergency Food Assistance Program.
- $175 million for senior nutrition services, such as Meal on Wheels.
State and Local Funding
The $160 billion in funding to state and local governments – one of the most contentious issues of the deliberations – was not included in the final bill. Legislators opposing the measure argued that states were given $150 billion to use for coronavirus expenses in the earlier relief package. However, state and local government leaders, some of whom have raced to spend the money by the current December 30 deadline, will have an additional year to spend the funding.
Goldin Peiser & Peiser will continue to monitor all matters related to the new stimulus bill, especially with regard to small business lending and PPP loans. Our CARE team can help ensure you are receiving the maximum amount of loan forgiveness by complying with program requirements.
Please visit our PPP Loan Forgiveness Consulting Services website page to learn more. If you need help with your PPP loan applications or have questions regarding loan forgiveness, email us at CARETEAM@GPPcpa.com.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.