New COVID-19 Relief Bill Highlights
On Monday, December 21, 2020, Congress passed a $900 billion relief package in response to COVID-19 in connection with its annual spending bill. This bill addresses many items impacting small businesses and taxpayers facing economic uncertainty. The following is a high-level summary of the new package:
- Passed by both houses of Congress. The President is expected to sign.
- As experienced with the CARES Act, expect additional information in the form of interpretations, regulations, technical corrections, etc.
- PPP Related Provisions:
- The big news is that borrowers WILL be able to deduct expenses paid with PPP funds even though the debt has been forgiven. This is a major win for businesses.
- Additional categories of qualified expenses have been added for all PPP loans. Generally not a big deal for most businesses who have been able to use up their PPP funds on payroll, but it may help in some cases.
- A second round of PPP loans will be made available:
- SBA has 10 days after enactment to issue regulations.
- How to qualify for second loan:
- Not more than 300 employees
- Have used or will use up all first round PPP dollars
- Demonstrate a 25% reduction in gross receipts (revenue) in any quarter in 2020 vs. same quarter in 2019. THIS IS WHAT BUISNESSES SHOULD BE QUANTIFYING RIGHT NOW TO DETERMINE IF ELIGIBLE. If it looks like you will be eligible, let your banker know you plan to apply for the second round.
- Loan amount is 2.5 X average monthly payroll, except businesses in the accommodations or food service industries, who get to use 3.5 X
- $2M maximum loan
- Various other provisions apply
- Additional debt relief on pre COVID SBA loans…3 months for most borrowers/9 months for certain highly impacted industries.
- $300 per week of unemployment benefits above state benefits through March 14, 2021
- $600 per person stimulus payment to eligible individuals (income limits apply)
You will see a lot of updates being released over the next few days. Let us know how we can help at email@example.com.
About the Author
Doug Jones provides fractional CFO and senior financial management services to small and midsize organizations. In addition to improving his clients’ accounting and finance operations, Doug frequently serves as the link between company owners and outside advisors including attorneys, CPAs, investment bankers, appraisers, and personal financial advisors. He is skilled in identifying and integrating the full range of financial and non-financial business issues in contract negotiations and resolution of business decisions. He is a member of Fahrenheit’s Leadership Team.