Year-End COVID-19 Relief Signed by the President

 Business Relief 

• The agreement revives and modifies the Paycheck Protection Program with $284 billion in funds; 
  • New loans terms – borrowers will need to show a 25% loss in revenue in one quarter capped at $2 million (notably down from $10 million in the first round). 
  • Set aside for businesses with 10 or fewer employees – for first-time borrowers $15 billion set aside and for the second draw there is $25 billion.
  • Businesses under NAICS code 72 (accommodations and food service) are eligible for an increased loan amount, 3.5x average monthly payroll cost.
  • PPP Second Draw – Businesses that already received a PPP loan will be eligible to get a second one under the new terms businesses will need to show a 25% loss in revenue in one quarter capped at $2 million (notably down from $10 million in the first round) and under 300 employees. 
  • Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning Feb. 15, 2019, through Feb. 15, 2020. 
  • Adds PPE expenses, costs associated with outdoor dining, and supplier costs as eligible and forgivable expenses;
  • PPP loans that are forgiven will be deductible –  As stated in the bill “no deduction shall be denied or reduced, no tax attribute shall be reduced, and no basis increase shall be denied, by reason of the exclusion from gross income provided by paragraph”
  • Application for PPP Loan Forgiveness – loans under $150,000 from the first round, the submission will be as simple as a one-page application for forgiveness, however, all of the same rules apply. Despite this news, it is recommended that those looking for forgiveness fill out the long application before actually submitting the short application and keep the longer application with answers on file in case of a future audit. Loans between $150,000 and $2,000,000 have some criteria changes. 
  • EIDL Advance Grant and PPP interaction – repeal of the CARES Act provision which requires PPP borrowers to deduct their EIDL advance from the PPP loan forgiveness amount. 
• $15 billion in dedicated funding for grants of up to $10 million to live venues, independent movie theaters, and cultural institutions administered through SBA. Grants can be used to cover expenses such as payroll costs, rent, utilities, and personal protective equipment. Two priority periods are established to ensure the hardest hit entities have dedicated access to assistance for the first 28 days of the program, while a reserve fund is made available to ensure that entities that are ineligible for the priority periods are able to receive assistance following the two 14-day priority periods. A set-aside of $2 billion is also reserved for entities with 50 or fewer employees. The program is authorized to make supplemental grants equal to 50% of the initial grant.
• $20 billion for new Economic Injury Disaster Loan Advance Grants for any small businesses or non-profits that received the advance previously are eligible to receive the difference between what they already received and $10,000 if they are in an area that is designated low income (this will likely follow the methodology of New Market Tax Credits – see a map of VT NMTC zones here).  

• Debt Relief for 7(a) borrowers – the deal has $3.5 billion for principal and interest payments of new and existing borrowers for one year.

• The employee retention tax credit, a payroll tax credit created under CARES to encourage businesses to hold on to their workers, that was set to expire at the end of this year, was extended and increased from 50% to 70%. The bill clarifies that employers who receive PPP are still eligible for wages not paid for by the forgiven loan.   
• Extended Support for Paid Sick Leave from FFCRA –  As a result of a great deal of advocacy by organizations such as the Lake Chamber around issues of inadvertent triggers of FFCRA leave, it is no longer mandatory. However, the tax credit for employers offering paid sick leave under the Families First Coronavirus Response Act framework is extended through March 31, 2021. The benefit is also extended to self-employed employees.