Congress Poised to Pass Long-Awaited COVID-19 Relief Bill that incudes Additional Funding for Paycheck Protection Program (PPP) Loans
After months of negotiations, Congress is now expected to pass a long-awaited – and desperately needed – COVID-19 relief bill. Presently, the bill contains numerous provisions targeted to help individuals and certain industries hit hardest by the pandemic. It also includes more than $284 billion for first and second forgivable PPP loans, expanded PPP eligibility for nonprofit organizations and news outlets, and modifications to the program to serve small businesses, nonprofits and independent restaurants.
Highlights of the second round of PPP loans include:
- Small businesses may receive a second PPP loan if they have fewer than 300 employees and can prove that their revenue has fallen by at least 25% in the first, second or third quarter of 2020 relative to the same quarter in 2019.
- The maximum amount for a second draw will be $2 million.
- Funds have been earmarked for non-profits and news outlets that weren’t eligible in the first round.
- Publicly traded companies will be barred from participating, according to Republicans on the House Small Business Committee.
The bill also answers one of the biggest points of contention regarding the initial round of PPP loans: Can a business deduct business expenses if it used forgiven PPP loan money to pay for them? Answer: Yes. Businesses that received PPP loans and had them forgiven will be allowed to deduct the costs covered by those loans on their federal tax returns.
Additional relief available includes $20 billion for targeted grants through the Economic Injury Disaster Loans program. Funds have also been earmarked for “very small” businesses and lending through community-based lenders like Community Development Financial Institutions (DDFIs) and Minority Depository Institutions (MDIs). This includes $9 billion in U.S. Treasury capital investments in CDFIs and MDIs and $3 billion for the CDFI fund to support low income and underserved communities. The package provides $15 billion for independent movie theaters and cultural institutions.
With welcome news regarding vaccines and now this new COVID-19 relief legislation around the corner, there is reason to be cautiously hopeful for a better 2021. But with businesses facing many more months of negative impacts from the pandemic, they should evaluate all potential relief available to them. If you have questions about what relief you can obtain for your business, please do not hesitate to contact us for assistance.