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Congress Approves Covid Relief Package and Averts Government Shutdown
On Monday, December 21, the House and Senate moved swiftly to approve a year end funding bill, covid relief package and a slate of tax provisions, averting a government shutdown and providing much needed assistance and relief to small businesses and individuals who have been devastated by the Covid-19 pandemic.
In a statement from Keith Hall, president and CEO, commenting on the small business support included in the bipartisan COVID relief bill calling it “critical holiday relief”:
“This is critical holiday relief for the struggling small business community, relief desperately needed and a down payment on what will be necessary in the future to keep millions of Mom-and-Pop businesses throughout the country from shutting their doors for good.
The small business community has been devastated from the impact of COVID and unfortunately have had to shoulder the brunt without continued support from the federal government to keep doors open, pay employees and serve customers.
The small business financial support included in this measure will provide millions of dollars in additional loan opportunities through the Paycheck Protection Act for countless small businesses who are depending on it as a life-line. In addition to these critical small business funds, this bill also includes a vital extension in unemployment benefits for millions of out of work Americans, along with direct payments that will help those who continue to struggle.
This COVID relief bill can’t be the end! Small businesses are the backbone of our economy and are going to need continued support throughout 2021 and beyond if entrepreneurship is to survive as a great American ideal.”
The bill is inclusive of several major provisions that the NASE has actively championed and requested from congressional leaders, including:
Fix Tax Concerns with Forgiven PPP Loans and EIDL Advances
The law clarifies numerous provisions including:
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Removes the requirement for PPP borrowers to deduct the amount of their EIDL advance from their PPP forgiveness amount.
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Gross income does not include any amount that would otherwise arise from the forgiveness of a Paycheck Protection Program (PPP) loan
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Gross income does not include forgiveness of certain loans, emergency EIDL grants, and certain loan repayment assistance.
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Deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness.
Second Round of PPP
The law includes a second PPP loan of up to $2 million for smaller, harder hit businesses. Businesses must:
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Employ no more than 300 people,
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Demonstrate loss of 25% gross receipts in any quarter in 2020 when compared to the same quarter in 2019, and
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Use first PPP in full prior to second loan.
Expansion of Eligible Expenses for PPP
The law makes the following expenses allowable and forgivable uses for Paycheck Protection Program funds:
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Operations expenditures such as software, cloud computing, and other human resources and accounting needs,
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property damage costs due to public disturbances that are not covered by insurance,
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supplier costs such as expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that were essential to the recipient’s operations at the time at which the expenditure was made
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supplier costs of perishable goods can be made before or during the life of the loan.
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worker protection expenditure. Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.
Simplified Forgiveness Application Process
More about the bill and additional provisions, can be found here.
here.