On December 15, 2020, Congress introduced two bipartisan COVID-19 relief bills, the COVID-19 Emergency Relief Act of 2020 ($748 billion) and the State and Local Support and Small Business Protection Act of 2020 ($160 billion), that contain payroll-related provisions. Congress included additional benefits to small businesses compared to the first Cares Act PPP loans.
COVID-19 Emergency Relief Act of 2020
Paycheck Protection Program & Small Business Support
$300 billion to the Small Business Administration for funding to allow the hardest-hit small businesses to receive a second forgivable Paycheck Protection Program (PPP) loan, expenses paid with this PPP loan are tax deductible. Details on when the PPP program would be accessible are pending.
- Eligibility would be limited to:
- Small businesses with 300 or fewer employees that have sustained a 30 percent revenue loss in any quarter of 2020.
- Small 501(c)(6) organizations that are not lobbying organizations and that have 150 employees or fewer, such as local chambers of commerce, economic development organizations, and tourism offices.
- Forgivable expenses are expanded to include supplier costs and investments in facility modifications and personal protective equipment to operate safely.
- Business expenses paid for with the proceeds of PPP loans are tax deductible, consistent with Congressional intent in the CARES Act.
- Economic Injury Disaster Loan grant advances.
- Loan forgiveness process is simplified for borrowers with PPP loans of $150,000 or less.
- Set-asides are included to ensure that smaller borrowers and underserved communities get the help they need, such as: for small businesses with 10 or fewer employees; for loans made by small community lenders, including Community Development Financial Institutions (CDFIs), credit unions, small community banks, Minority Depository Institutions (MDIs), and farm service lenders; and for the Minority Business Development Agency.
- Funding for independent live venue operators, including eligible independent movie theatres and museums, affected by COVID-19 stay-at-home orders.
- Extension of Section 1112 of the CARES Act, which provides payment of principal, interest, and associated fees on qualifying Small Business Administration (SBA) 7(a), 504 and microloans.
- Funding for SBA loan products to increase guarantees on SBA 7(a) loans and reduce fees on 7(a) and 504 loans; provide loan subsidies for 7(a) loans; re-purposing of $138 billion in unspent allocations to be reinvested in the PPP program.
The key components of the bill related to unemployment assistance include:
- Extension of all pandemic unemployment insurance programs by 16 weeks from their expiration at the end of December.
- Federal supplemental unemployment insurance benefits expanded by $300 per week for 16 weeks, from the end of December into April.
The bill also provides for vaccine development and distribution, testing and tracing, supporting health care workers, and other health provisions.
State and Local Support and Small Business Protection Act of 2020
This bill provides for State, Local, and Tribal Assistance and Liability Protections.
- One-third of the $152 billion would be distributed based on each state’s proportion to the U.S. population.
- Two-thirds of the $152 billion would be distributed based on the proportion of each state’s revenue losses relative to the total revenue losses of all states nationwide. Each state is entitled to a minimum of $500 million. The funding would be distributed in three tranches based on population, revenue tracking, and needs based tracking.
- $8 billion in funding for Tribes would be allocated by 60 percent population and 40 percent based on the number of employees of each Tribal entity.
- Establishes a nationwide gross negligence standard for COVID-19 exposure, medical malpractice, and workplace testing claims.
- Allows plaintiffs to file in state court. Defendants have the option to remove to federal court. Allows Attorney General to investigate and bring a civil action addressing pattern or practice of sending meritless demand letters. Provides that employers are not subject to liability under federal employment law in COVID-19 exposure cases or change in working conditions related to COVID-19 if the employer was trying to conform to public health standards and guidance. Protects public accommodations that take measures to protect against COVID-19. Ensures that an employer’s decision PPE, COVID-19 policies, procedures, or training, workplace testing, or financial assistance to an independent contractor does not create evidence of an employer-employee relationship. Protections apply to claims arising from injuries that occurred from December 2019 through the later of one year after enactment or the end of the coronavirus public health emergency
2020 has certainly been like no other year and tax laws and rules are changing rapidly. Please contact us for PPP loan forgiveness consulting or questions about how this legislation may impact your business. We’d be glad to assist you in navigating the everchanging rules and regulations.