The $900 billion emergency package passed by Congress on Christmas week does much more than bolster unemployment benefits and provide families and individuals with stimulus checks. What follows is a quick overview of how the legislation will help employers, too.
Replenishing the PPP
The bill includes approximately $325 billion in funding to the Small Business Administration (SBA) to assist businesses that have been affected by the COVID-19 pandemic.
Specifically, the bill allocates $284 billion in funding to replenish the Paycheck Protection Program (PPP), which provides forgivable small business loans to eligible applicants. Under the bill, certain firms that had already applied for, received and exhausted PPP funds will be eligible to apply for another PPP loan.
To be eligible for a second PPP loan, a small business must have fewer than 300 employees and have sustained at least a 30% loss in revenue during any quarter of 2020. Additionally, small 501(c)(6) organizations with 150 or fewer employees that are not lobbying organizations would be eligible for a PPP loan with this round of funding.
The bill also provides the following with regard to the PPP:
- Expansion of expenses eligible for loan forgiveness to include supplier costs and investment costs related to modifying facilities and obtaining personal protective equipment for safety.
- Simplified loan forgiveness process for businesses that have borrowed $150,000 or less in PPP loans.
- Confirmation that business expenses paid for with PPP loan funds are tax deductible.
The bill also directs $15 billion in funding for independent live-venue operators affected by COVID-19 and another $20 billion for small-business grants.
What’s Not Included
Although providing direct aid to state, local and tribal governments and establishing an employer liability shield were included in early drafts of the bill, the two provisions were not included in the final text. These provisions were intensely negotiated by both parties and were the main cause of the stalled negotiations, but were ultimately dropped in order to pass the bill in a timely manner.
While the bill doesn’t provide direct aid to state, local and tribal governments, it does extend the deadline for states and cities to use unspent money provided by the CARES Act. Under the CARES Act, states and cities had until the end of 2020 to spend their funds, and any unspent amount would have to be returned to the Department of Treasury. This bill extends the original CARES Act deadline for a full year.
Lastly, the Families First Coronavirus Response Act (FFCRA) was not explicitly extended by the bill, and so employers are no longer required to provide federal FFCRA leave past Dec. 31, 2020.
There is a provision in the bill that pertains to FFCRA which provides that employers who voluntarily choose to continue to provide leave in line with FFCRA terms can continue to receive a federal tax credit for leave through March 31, 2021.
Employers should keep in mind that some states and local jurisdictions have passed their own FFCRA-like laws that extend beyond Dec. 31, 2020, and others that were set to end Dec. 31 may be extended well into 2021.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerage in the nation. As an employee-owned organization, we’ve been protecting what’s yours since 1915. Contact us at firstname.lastname@example.org or 480-730-4920.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.