President Trump has now signed the COVID-19 relief package that was approved by Congress last week. An overview of important points for the local business community is provided below.
We are working with the Small Business Development Center to set up a webinar soon that will help local businesses access additional benefits. Please watch for more information in the next week or so.
Small Business – $325 Billion
Critical funding and policy changes are included to help small businesses, including minority-owned businesses, and nonprofits recover from the pandemic. This bill includes $284 billion for the Paycheck Protection Program (PPP) and extends PPP through March 31, 2021. Changes to PPP include:
- Provides a second PPP forgivable loan for the hardest-hit small businesses and non-profits with 300 or fewer employees and that can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019;
- Creates a dedicated $15 billion set-aside for lending through community financial institutions, including Community Development Financial Institutions and Minority Depository Institutions to increase access for minority-owned and other underserved small businesses and nonprofits;
- Creates a set-aside for very small businesses with 10 or fewer employees and for small businesses located in distressed areas;
- Expands PPP eligibility for more critical access hospitals, local newspapers and TV and radio broadcasters, housing cooperatives, and 501(c)(6) nonprofits, including tourism promotion organizations and local chambers of commerce;
- Allows for small businesses in the restaurant and hospitality industries to receive larger awards of 3.5 times average total monthly payroll, rather than 2.5 times;
- Adds PPE expenses, costs associated with outdoor dining, and supplier costs as eligible and forgivable expenses;
- Simplifies the forgiveness process for loans of $150,000 and less;
- Repeals the requirement of deducting an EIDL Advance from the PPP forgiveness amount.
EIDL (Economic Injury Disaster Loan) Grant Program – $20 Billion
This bill includes $20 billion for EIDL Advance grants. Small businesses and nonprofits in low-income communities are eligible to receive $10,000 grants. Any small businesses and nonprofits in low-income communities that received an EIDL Advance previously are also eligible to receive the full $10,000 if their award was less in the first round of grants.
Grants for Shuttered Venue Operators – $15 Billion
The bill provides $15 billion for SBA grants up to $10 million to live venues, independent movie theaters, and cultural institutions to address the economic effects of the pandemic. 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 ensure 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 percent of the initial grant.
No Extension of FFCRA and FMLA
There is no extension of Families First Coronavirus Response Act (FFCRA) paid sick leave/paid FMLA benefits. Employees are not entitled to additional FFCRA leave after December 31, 2020. As of January 1, 2021, covered private-sector employers may voluntarily provide paid leave that otherwise would have qualified for FFCRA if the FFCRA had not expired, and if they do, they may take the tax credit associated with this leave. The tax credit may only be taken for leave through March 31, 2021.
Extension of the Employee Retention Tax Credit
The bill extends (through June 30, 2021) and expands the refundable Employee Retention Tax Credit (ERTC), which was established in the CARES Act. The credit rate is increased from 50 percent to 70 percent of qualified wages; expands eligibility for the credit by reducing the required year-over year gross receipts decline from 50 percent to 20 percent and provides a safe harbor allowing employers to use prior quarter gross receipts to determine eligibility; increases the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees, and allows businesses with PPP loans to qualify, among other changes.
Health and Dependent Care Flexible Spending Arrangements
The bill allows taxpayers to rollover unused amounts in their health and dependent care flexible spending arrangements from 2020 to 2021 and from 2021 to 2022. This provision also permits employers to allow employees to make a 2021 mid-year prospective change in contribution amounts.
An Extension of Expanded Unemployment Insurance
The bill extends two Coronavirus Aid, Relief, and Economic Security Act (CARES Act) unemployment programs for 11 weeks. Specifically, the bill provides $300 per week for all workers receiving unemployment benefits, through March 14, 2021. The bill also extends the Pandemic Unemployment Assistance (PUA) program, with expanded coverage to the self-employed, gig workers, and others in non-traditional employment, and the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of federally funded unemployment benefits to individuals who exhaust their regular state benefits. Additionally, the bill increases the maximum number of weeks an individual may claim benefits through the combination of regular state unemployment plus the PEUC program, or through the PUA program, to 50 weeks. The bill also provides an extra benefit of $100 per week for certain workers who have both wage and self-employment income but whose base UI benefit calculation does not take their self-employment into account.
Extended SBA Debt Relief Payments – $3.5 Billion
This bill provides $3.5 billion to resume debt relief payments of principal and interest (P&I) on small business loans guaranteed by the SBA under the 7(a), 504 and microloan programs. All borrowers with qualifying loans approved by the SBA prior to the CARES Act will receive an additional three months of P&I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month. After the three-month period described above, borrowers considered to be underserved—namely the smallest or hardest-hit by the pandemic—will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month. SBA payments of P&I on the first 6 months of newly approved loans will resume for all loans approved between February 1 and September 30, 2021, also capped at $9,000 per month.
Enhancements of SBA Lending Programs – $2 Billion
This bill provides $2 billion to enhance SBA’s core programs, including 7(a), Community Advantage, 504, and the Microloan program, by making them more affordable and useful to small businesses. It also provides $57 million for the SBA Microloan Program to provide technical assistance and leverage about $64 million in microloans for minority-owned and other underserved small businesses.
Community Development Financial Institutions and Minority Depository Institutions – $12 Billion
This legislation includes funding for CDFIs, and support for a new Neighborhood Capital Investment Program to support CDFIs and MDIs, among other key policies to support the work of these lenders in underserved communities. This legislation also creates a set-aside of 25%, up to $15 billion, of funds for distribution through community lenders like Community Development Financial Institutions, Minority Depository Institutions, microloan funds, and
Reinforce Key Health Messages for Staff and Customers
It is more important than ever now to reinforce health and safety protocols for your business. We know that our economic recovery relies on a health workforce and healthy customers. With the novel coronavirus caseload increasing all around us it is crucial that we follow the science and the guidelines. Please remind your employees to:
- Wear face coverings in public – cover nose and mouth
- Physical distance with others – at least 6 feet
- Keep communal objects and spaces clean
- Wash hands frequently
Our health and economic recovery depend upon personal responsibility.