Federal COVID Relief Package Extends PPP, EIDL, & Payroll Tax Credit Programs

Updated 12/28/20

The latest COVID relief package passed by Congress on Monday, December 21st extends financial assistance programs for small businesses, non-profit organizations, and unemployed workers. President Trump signed the legislation on Sunday, December 27th. 

The $900 billion relief bill includes $284 billion for renewal of the Paycheck Protection Program. Organizations with less than 300 employees can apply for a “second draw” of up to $2 million. Terms of the program are expanded to allow employers to claim eligible expenses over a period of 8 to 24 weeks and those expenses could include operations, property damage stemming from public disturbance not covered by insurance, supplier costs, and worker protection. The 60% payroll rule still applies.

Small businesses can also apply for an initial PPP loan.

Businesses in the restaurant and hospitality industries are eligible to receive loans of 3.5 times average monthly payroll, rather than 2.5 times for other businesses. 

Organizations receiving forgivable loans will not have a tax liability for loan proceeds and loans of up to $150,000 will have a one-page forgiveness application.

$20 billion in Economic Injury Disaster Loan advance grants is also appropriated. The program will provide priority for the $10,000 grant to employers with less than 300 employees, located in low-income neighborhoods, that have experienced a 30% reduction in gross receipts during any 8-week period between March 2, and December 31, 2020 compared to a comparable 8-week period before March 2. Organizations meeting that description that received a grant less than $10,000 can reapply to receive the difference.

EIDL advances will not reduce PPP loan forgiveness and are not included in taxable income.

Additionally, $15 billion in grants are being dedicated to helping live venues stay afloat.

The PPP and EIDL programs are expected to reopen quickly upon approval.

The Employee Retention Tax Credit is extended through June 30, 2021. The prior credit was 50% on $10,000 in qualified wages for the whole year (or a maximum of $5,000 per employee). The new credit, beginning January 1, is 70% on $10,000 in wages per quarter (or a maximum $14,000 per employee through June 30th). 

The new law also expands which employers are eligible. Prior to the new law, the employee retention tax credit applied only to an employer who experienced a decline in gross receipts of more than 50% in a quarter compared to the same quarter in 2019. Eligibility is now expanded to include employers who experienced a decline of more than 20%.

Employers can also apply to the PPP program and take advantage of the tax credit program, provided the same wages are not used.

The U.S. Chamber of Commerce has compiled an updated guide with FAQs for the PPP, EIDL, Employee Retention Tax Credit, and SBA Loan Debt Forgiveness programs. On Tuesday, December 21st, the U.S. Chamber hosted a webinar to provide an overview of these program updates in the latest package. A recording of that webinar is available here.

In terms of extended unemployment benefits, two expiring CARES Act programs – Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation – are extended from December 26 to March 14. The legislation also adds $300 to weekly unemployment benefits.

The Congressional package also includes another round of stimulus payments of $600 for individuals, $1,200 for couples filing jointly making up to $150,000 per year, plus $600 per child.

Additional details will be kept up to date on the Chamber’s website.