New COVID Relief Law - Key Business Provisions
In December 27, 2020, President Trump signed the latest COVID relief package into law. Among the many provisions of the law, including one time (again) income based stimulus payments and expanded unemployment insurance benefits, the law contains several significant provisions affecting businesses.
Some of these key provisions include:
Second Round of PPP - The new law makes available a second round of PPP funding for qualified businesses that experienced a greater than 25% reduction in gross receipts in any quarter of 2020 as compared to the same quarter of 2019. Special rules apply for businesses started in late 2019 or early 2020. The amount of the second PPP loan is based on 2.5 times the average monthly qualifying payroll costs in the 12 month period prior to loan application, capped at $100,000 per employee.
PPP expenditures (payroll, rent, utilities, mortgage interest) that were previously not tax deductible if the borrower applied for forgiveness or expected to receive forgiveness in 2020 or 2021 are now tax deductible and the PPP funds are not considered taxable income. The same holds true for the second round of new PPP funds where the borrower applies for and receives forgiveness. States may treat this differently on a state by state basis.
Extension of employee retention and paid sick payroll tax credits into 2021. These credits are available for wages paid not otherwise covered by PPP forgiven funds.