The US Senate and House of Representatives passed the $900 billion COVID-19 relief bill last night.  The final legislation, the Consolidated Appropriations Act, 2021, had small differences to what we shared in our update yesterday.  While all of the things we posted yesterday are contained in the over 5,500 page bill, there are some small differences that are highlighted below along with additional legislation you may be interested in.

Eligibility For Second Round of PPP Loans (PPP2)

Eligibility requirements for a PPP2 loan are:

  • The borrower must employ no more than 300 employees, or meet an alternative size standard.
  • The borrower must demonstrate that there was a 25% reduction from the gross receipts of the entity during the same quarter in 2019.
  • For the purposes of this 25% rule, gross receipts will include all revenues from the normal operation of the business before subtraction of expenses but will not include amounts borrowed, including amounts received for PPP loans.

PPP Eligibility for 501(c)(6) Organizations

Organizations classified as 501(c)(6) are now eligible for PPP loans if they:

  • Have less than 300 employees
  • Did not receive more than 15% percent of receipts from lobbying activities
  • Lobbying did not make up more than 15% of the total activities of the organization
  • The cost of all lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year

EIDL Emergency Grants Do Not Reduce Amount of PPP Forgiveness

The CARES Act established EIDL Emergency grants of up to $10,000 for qualifying businesses.  If a business received an EIDL Grant and then subsequently received a PPP loan, the amount of PPP forgiveness was to be reduced by the amount of the EIDL grant.  The new bill removes this so that there is no reduction in forgiveness for those who received a PPP loan and an EIDL Grant.

EIDL Grants Available Again

A new trough of dollars was put into the EIDL program and EIDL Grants of up to $10,000 are again available for those businesses that qualify but did not receive them in the first round.  Additionally, if a business did not receive their full EIDL Grant of $1,000 per employee up to $10,000 in the first round, they can apply to receive their full amount.

Employee Retention Credit Extended and Changed

The employee retention credit is extended until July 1, 2021 (previously it ended January 1, 2021).  The credit is also modified so that:

  • Employers with under 500 employees can claim the credit on all wages paid if there is a reduction in gross receipts of more than 20% for any quarter.
  • Up to $10,000 in wages qualify per employee in a qualified quarter.
  • The credit is 70% of qualified wages and is taken as a reduction in quarterly payroll taxes and/or an advance payment.

Previously borrowers of PPP loans could not take advantage of the Employee Retention Credit.  There is language in the bill which should allow for PPP borrowers to now take the credit on qualified wages paid that were not forgiven via a PPP loan.  We are waiting for more guidance to understand exactly what circumstances allow for a PPP borrower to take the employee retention credit.

Extension of Tax Credit for Employers Offering Qualified Paid Sick and Family Leave

The bill extends the tax credit relating to qualified paid sick and family leave under the Families First Coronavirus Response Act to March 31, 2021 from the previous December 31, 2020.

Next Steps

The SBA and US Treasury have been given timelines to put out procedures, guidance, forms, etc. to implement the items in this new bill.  We will be following the guidance and share with you the “when’s” and “how’s” on taking advantage of these items.