This holiday season the country should have a renewed sense of hope as our frontline workers continue receiving the first round of COVID-19 vaccinations and now with the passage of an additional round of COVID relief, the second largest relief package in our nation’s history following the CARES Act.
After months of delay, Congress late Monday overwhelmingly passed a spending package containing $900 billion in COVID relief and $1.4 trillion to fund the government through September 30, 2021.
The COVID relief package delivers needed relief for American businesses, nonprofits, and families hit hard by the pandemic.
Learn more about what this relief means for you and/or your business with a few significant highlights of the package below.
- RELIEF FOR INDIVIDUALS AND FAMILIES:
- Direct payments to individuals
Individual adults will receive $600 for those making up to $75,000 a year on their 2019 tax returns, $1,200 for couples making up to $150,000, and $600 for each dependent child. Individuals earning between $75,000 and $99,000 would receive a partial payment.
- Extended aid for unemployed workers
Extends unemployment benefits for jobless workers, who will receive up to $300 per week through March 14th. This includes the Pandemic Unemployment Assistance (PUA) which provides UI benefits to workers who traditionally are ineligible.
- Rental Assistance
Provides $25 billion in rental assistance to help pay past due rent, future rent, and utility bills. Extends the existing CDC eviction moratorium through January 31, 2021. The Treasury Department will disperse the rental assistance to states via a formula based on population.
- CONTINUED LIFELINE FOR SMALL BUSINESSES:
- Extends and expands the Paycheck Protection Program (PPP)
Provides renewed funding of $284 billion and extends the program to March 31. Will provide forgivable loans to both first- and second-time small business borrowers. The bill expands eligibility of the program for 501(c)(6) nonprofit and destination marketing organizations. It authorizes hard-hit small businesses with fewer than 300 employees and at least a 25% drop in gross receipts over a specified period to receive a second loan. The bill dedicates a portion of the funding specifically for low-income communities and sets money aside for loans from community-based and minority-owned lenders.
The bill makes some changes to the program to reduce the maximum loan amount from $10 million to $2 million and expands how funds can be used. While the requirement that 60% of the PPP loan must be used for payroll remains in place, Congress added four additional categories for qualified expenses: 1) operations expenses for items such as software and computing, 2) supplier costs for goods essential to the operation of the business, 3) worker protection expenses such as items need to protect workers and customers to comply with CDC guidance i.e. plexiglass, expansion of outdoor dining etc., 4) property damage expenses as result of riots.
While the CARES Act specified that forgiven PPP loans would not count as taxable income, the new package clarifies that businesses can deduct expenses paid with forgiven PPP loans.
- Expands the Economic Injury Disaster Loan (EIDL) Program
Provides $40 billion to extend the Small Business Administration EIDL grants through December 31, 2021 and sets aside $20 billion for employers in low-income areas with 300 or less employees who experience at least a 30% economic loss, allowing them to receive a $10,000 grant. Authorizes individuals who previously received a partial EIDL grant to receive an additional payment for a combined total of $10,000. Importantly it removes the requirement for EIDL emergency grants to be deducted from the calculation of PPP loan forgiveness.
Are you a small business that needs help navigating these new changes and impacts to your existing relief? The U.S. Chamber has created a go-to guide to answer your questions here that will continue to be updated as more information becomes available.
- TARGETED BUSINESS SUPPORT:
- Live venue grant program
Provides $15 billion for the Small Business Administration to concert venues, independent movie theaters, live entertainment venues, museums, and cultural institutions who demonstrate at least a 25% decline in revenue.
- Transportation and travel support
Includes $45 billion for relief to transit agencies, airlines, airports, state departments of transportation, the motorcoach industry and Amtrak. Includes $15 billion to cover airline salaries and benefits through the end of March, $1 billion for airline contractor payrolls, and $2 billion for airports and airport-based business.
- Support for the agriculture community & food supply
Provides $12 billion to crop farmers, cattle ranchers, and rural communities.
- TAX PROVISIONS PROVIDE RELIEF AND STIMULATE ECONOMIC RECOVERY
- Employee Retention Tax Credit (ERTC)
Extends the ERTC to July 1 and increases the refundable payroll tax credit from a maximum of $5,000 to $14,000 by changing the calculation from 50% of wages paid up to $10,000 to 70% of wages paid up to $10,000 for any quarter.
- Low-Income Housing Tax Credit (LIHTC)
Increases allocations to states for LIHTC which subsidizes the construction and rehabilitation of housing developments that have strict income limits for eligible tenants and their cost of housing.
- Employer-side Social Security Payroll Tax Credits
Extends through March 2021 to offset paid sick and family leave related to the coronavirus created Families First Coronavirus Response Act.
- Deduction for Business Meals
Expansion of the deduction for business meals to 100% for 2021 and 2022.
- Tax Extenders
The bill included tax extenders for 32 of the 33 tax provisions that were set to expire at the end of 2020 including the permanent extension of lower excise tax rates for beer, wine and spirits, and the 5-year extension of tax incentives for investing in low-income areas and hiring workers from disadvantaged groups.
- SUPPORT FOR SCHOOLS AND CHILDCARE ORGANIZATIONS TO CONTINUE SAFE OPERATIONS
- K-12 schools and higher education support
Provides $82 billion in funding for schools and universities to assist with reopening which includes $54.3 billion for K-12 schools and $22.7 billion for higher education.
- Safe opening of childcare
$10 billion for childcare centers to help providers safely reopen and $250 million for Head Start providers.
- COMBATING THE VIRUS WITH ADDITIONAL HEALTHCARE SUPPORT
- Vaccines, Testing & Tracing
Provides a total of $63 billion for vaccine distribution, testing, tracing and other health-care initiatives. Of this amount, $22.4 billion will go to states for testing, tracing and COVID mitigation programs, of which $2.5 billion is dedicated as grants targeting rural areas and communities of color.