Small Business COVID Relief Update

As you might have heard, Congress finally reached a compromise for an additional COVID economic relief package, and I was glad to get a helpful summary from my congressman, Ken Calvert. Thought I would share it with you so you can see which elements of the package can help your business weather the storm:

• Paycheck Protection Program (PPP)

  • Provides $284.5 billion dollars to reopen and strengthen the PPP for first time and second time borrowers.

  • Develops a process for a small business to receive a second PPP if the small business has less than 300 employees and can demonstrate a revenue reduction of 25 percent.

  • Maximum loan amount for a second draw PPP will be reduced to $2 million dollars.

  • Increases the PPP loan amount for NAICS 72 businesses (Accommodations and Food Service).

  • Creates a simplified PPP loan forgiveness application for loans under $150,000 dollars whereby the borrower signs and submits a one-page certification that requires the borrower to list the loan amount, the number of employees retained, and the estimated total amount of the loan spent on payroll costs.

  • Expands list of eligible expenses to include covered operations (software, cloud computing, and other human resources and accounting needs); property damage costs due to public disturbances that occurred during 2020 that are not covered by insurance; covered supplier costs; and covered worker protection expenditures (PPE).

  • Makes eligible 501c6s, destination marketing organizations (DMOs), local chambers of commerce, housing cooperatives, newspapers, broadcasters, and radio stations.

  • Clarification of tax treatment of Paycheck Protection Program loans: The bill clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness. The provision is effective as of the date of enactment of the CARES Act.

• Tax Provisions

  • Business meals deduction: The provision provides a 100-percent deduction for business meal food and beverage expenses provided by a restaurant that are paid or incurred in 2021 and 2022. Currently, the deduction is available for only 50 percent of such expenses.

  • Employee retention tax credit modifications: The provision extends and expands the CARES Act employee retention tax credit (ERTC). Beginning on January 1, 2021 and through June 30, 2021, the provision increases the credit rate from 50 percent to 70 percent of qualified wages.

  • Extension of paid sick and family leave: The Families First Coronavirus Response Act provided a refundable payroll tax credit for the mandated paid sick and family leave. This provision extends the tax credit through March 2021 for employers that continue to offer paid sick and family leave to their employees.

• Grants for Shuttered Venues

  • Creates a $15 billion dollar grant program for eligible venues, theaters, museums, and zoos.

• Debt Relief

  • Provides $3.5 billion to resume the principal and interest (P&I) payments of new and existing small business loans guaranteed by the SBA under the 7(a), 504, and Microloan programs.

• Unemployment Insurance Fraud Prevention

  • Includes Return-to-Work reporting requirements from House Republican's Back to Work Bonus bill. States must have a place for employers to report when someone turns down a job and must notify claimants of the requirement to accept suitable work.

Another helpful resource is this article from the Chamber of Commerce.

Hope this helps!