MORE RELIEF FOR BUSINESS OWNERS: THE CONSOLIDATED APPROPRIATIONS ACT
In a follow up to the 2020 CARES Act, President Trump recently signed into law a new COVID-19 relief bill intended to assist businesses, the Consolidated Appropriations Act, 2021. The new law provides $900 billion in aid. Critically, this legislation allots more than $284 billion to the Small Business Association for the continuation of the Paycheck Protection Program (“PPP”). Although exceptions and limitations apply, first-time borrowers, along with previous borrowers who meet the following criteria, may now qualify for a loan up to $2 million in this second round of PPP assistance:
- The business must have 300 or fewer employees;
- The business must demonstrate at least a 25% reduction in gross revenue receipts in any 2020 quarter relative to the same quarter in 2019; and
- The business must show that it has used or will use the full amount of its first PPP loan.
The new legislation also expands the rules related to loan forgiveness. Loan forgiveness is still available for loan proceeds spent on payroll, rent, covered mortgage interest and utilities. However, under the new rules, the following additional expenditures may also be forgivable: Payments for business software or cloud computing services that facilitate business operations, costs related to property damage from public disturbances in 2020 not covered by insurance, and costs associated with adapting business activities to comply with COVID-19 guidelines, among others. Moreover, the legislation also creates a simplified forgiveness process available for PPP loans in the amount of $150,000 or less. Finally, the legislation clarifies that otherwise deductible business expenses paid with the proceeds from a forgiven PPP loan are tax-deductible. This overturns prior IRS guidance.
This second round of stimulus should help businesses continue to endure the effects of the pandemic. If you have questions about what relief is available to your business, please contact us for assistance.
