After months of on-again, off-again negotiations, Congress finally came together on an omnibus spending package that included the latest round of COVID-19 relief as well as a bi-partisan energy deal.
In total, the package comes in at nearly $2.2 trillion and funds the government through the end of Sept. 2021. Here are some numbers, specific to the relief portion of the package:
- $900 billion in total relief spending
- $325 billion in direct aid to small businesses
- $284 billion for the Paycheck Protection Program (below is a thorough breakdown on PPP2)
- Language is included to ensure the deductibility of PPP assistance – this is a big win for ALA members
- $20 billion in Economic Injury Disaster Loan grants
- $600 in direct payments per person in households earning up to $75,000 ($1,200 for married couples earning up to $150,000)
- The government could start delivery of the checks as early as next week
- $300 in expanded unemployment insurance for 11 weeks
- Assistance will run out on March 14, 2021
- $194 billion for a host of additional programs, including vaccine rollout, food assistance, expanding broadband, rental aid, travel and hospitality relief, childcare, and HVAC improvements for colleges and schools
The government’s response to the pandemic now totals close to $4 trillion. Additional relief is expected once President-elect Biden takes office.
ALA will disseminate any relevant information or resources on this latest round of COVID-19 relief, as it becomes available.
Paycheck Protection Program 2
The detailed information below, comes from an online article from the “Journal of Accountancy.”
Who is eligible to apply
PPP2 loans will be available to first-time qualified borrowers and, for the first time, to businesses that previously received a PPP loan. Specifically, previous PPP recipients may apply for another loan of up to $2 million, provided they:
- Have 300 or fewer employees.
- Have used or will use the full amount of their first PPP loan.
- Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
PPP2 will also permit first-time borrowers from the following groups:
- Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans.
- Sole proprietors, independent contractors, and eligible self-employed individuals.
The bill allows borrowers that returned all or part of a previous PPP loan to reapply for the maximum amount available to them.
PPP loan terms
As with PPP1, the costs eligible for loan forgiveness in PPP2 include payroll, rent, covered mortgage interest, and utilities. PPP2 also makes the following potentially forgivable:
- Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines.
- Expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations.
- Covered operating costs such as software and cloud computing services and accounting needs.
To be eligible for full loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either eight or 24 weeks — the same parameters PPP1 had when it stopped accepting applications in August.
PPP borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, the same as with PPP1, but the maximum loan amount has been cut from $10 million in the first round to the previously mentioned $2 million maximum. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can get up to 3.5 times their average monthly payroll costs, again subject to a $2 million maximum.
Simplified application and other terms of note
The new COVID-19 relief bill also:
- Creates a simplified forgiveness application process for loans of $150,000 or less. Specifically, a borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The SBA must create the simplified application form within 24 days of the bill’s enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Borrowers are required to retain relevant records related to employment for four years and other records for three years, as the SBA may review and audit these loans to check for fraud.
- Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount.
- Includes set-asides to support first- and second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers that have recently been made eligible, and for loans made by community lenders.