The U.S. Senate and House of Representatives overwhelmingly passed a $900 billion COVID-19 relief bill Monday night.
Key provisions in the bill include:
- Payments of $600 for individuals making up to $75,000 per year and $1,200 for married couples making up to $150,000 per year, as well as a $600 payment for each child dependent. This provision doesn’t provide payments for adult dependents (dependents above the age of 17), which includes college students.
- Provide workers receiving unemployment benefits a $300 per week supplement from Dec. 26 until March 14, 2021.
Paychex Protection Program (PPP) provisions:
New PPP loans will be available to first-time qualified borrowers and businesses that previously received a PPP loan. 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.
New PPP loans 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.
- Not-for-profits, including churches.
- Accommodation and food services operations (those with North American Industry Classification System (NAICS) codes starting with 72) with fewer than 300 employees per physical location.
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 as the first PPP loans.
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 the first PPP program, but the maximum loan amount has been cut from $10 million in the first round to $2 million. 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.
The new COVID-19 relief bill also:
- Creates a simplified forgiveness application process for loans of $150,000 or less.
- Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount.
Tax deductibility for PPP expenses:
The bill includes clarification of the treatment of business expenses by businesses that received PPP loans that were subsequently forgiven. The bill provides the intent of the original legislation which was that such expenses can give rise to a deduction.
Miscellaneous Provisions:
The bill extends the employee retention tax credit and also temporarily (effective after December 31, 2020 through the end of 2020) allows a 100% business expense deduction for meals (rather than the current 50%) as long as the expense is for food or beverages provided by a restaurant.
The Consolidated Appropriations Act is large (over 5,000 pages). We will continue to email updates as more information becomes known.