On December 21, Congress voted to approve a second stimulus package for businesses and individuals adversely affected by the COVID-19 pandemic. President Trump subsequently signed the bill into law.
The $900 billion pandemic relief bill is the second largest federal stimulus after March’s Coronavirus Aid, Relief, and Economic Security (CARES Act). Along with extending several aid packages under the CARES Act that are set to expire on December 31, the legislation includes direct stimulus checks of $600 to individuals and enhanced unemployment benefits, as well as nearly $300 billion of Small Business Administration (SBA) funding for the Paycheck Protection Program (PPP), which had stopped taking loan applications in August.
Highlights of the stimulus package include the following:
Small Business Loans
The legislation provides $325 billion in aid to small businesses, including minority-owned businesses and nonprofits. The PPP program is being reopened with $284 billion in forgivable loans for small business borrowers, and also allowing certain distressed businesses to get a second loan. Of critical importance to many taxpayers, overriding the IRS, the legislation allows for the deductibility of expenses paid with PPP funds.
Businesses seeking additional PPP loans are advised to immediately prepare by gathering financial data to support their need for more funding. New PPP provisions include:
- Maximum loans of $2 million, based on 2.5 months of payroll costs.
- Usage of a simplified process for forgiveness of loans of $150,000 or less (up from $50,000).
- Forgivable expenses will now include investments in facility modifications, PPE and other supplier costs that are necessary to operate safely through the pandemic.
- Continued 60/40 allocation between payroll and non-payroll costs for full loan forgiveness.
- $12 billion in additional PPP loans are available for minority-owned businesses and the smallest businesses.
Additional small business measures include:
- $20 billion for Economic Injury Disaster Loans (EIDL) for businesses in low-income communities.
- $15 billion for live venues, independent movie theaters and other cultural organizations (including local newspapers, television and radio broadcasters).
- $3.5 billion to extend SBA debt relief payments and $2 billion to enhance SBA lending.
One-time $600 stimulus payments sent to individuals with incomes up to $75,000 based on 2019 income. The amount of payments will be reduced by $5 for every $100 of income above those thresholds, and will phase out entirely for individuals earning over $87,000.
- Eligible families will receive an additional $600 per child.
- Stimulus checks should be distributed through direct deposit starting next week.
Employee Retention Tax Credit
- The relief package expands and extends the Employee Retention Tax Credit (ERTC) established under the CARES Act to assist small businesses and nonprofits in retaining workers and continuing operations through the pandemic.
Unemployed individuals will receive $300 per week in federal benefits for 11 weeks - through mid-March 2021.
- Extension of two other unemployment programs that were part of the CARES Act:
- Jobless benefits are expanded under the Pandemic Unemployment Assistance program to gig workers, independent contractors, freelancers, self-employed individuals and specific other people impacted by COVID-19.
- Individuals who exhaust their regular state benefits are eligible for an additional 13 weeks of payment under the Pandemic Emergency Unemployment Compensation program.
- Both programs will close to new applicants March 14, 2021 and phase out in early April for existing claimants.
Schools and Child Care
K-12 schools and colleges will receive $82 million in relief aid, including assistance to help reopen classrooms safely.
- $10 billion to support childcare providers impacted by COVID-19.
$20 billion to make vaccines available at no charge and $9 billion for vaccine distribution.
- $22 billion to assist states with COVID-19 testing.
Rental Assistance and Evictions
Eviction protection has been extended from December 31, 2020 to January 31, 2021.
- $25 billion in rental assistance for those who lost income due to the pandemic.
Food and Nutrition
- 15% increase for six months in Supplemental Nutrition Assistance Program (SNAP) benefits.
- $400 million to food banks and food pantries.
- $175 million for senior nutrition services such as Meal on Wheels.
State and Local Funding
Legislators ultimately opposed $160 billion in funding to state and local governments. State and local government leaders will have an additional year to spend the funding provided under the CARES Act.
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