New Stimulus Bill | Money and Mask

Understanding Congress’s New Coronavirus Stimulus Bill

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The New Stimulus Bill Provides Relief to Small and Struggling Businesses

In the 11th hour, Congress passed a new Coronavirus stimulus package. While the package offers many people a $600 check, the real news is its benefits to businesses struggling throughout the pandemic.

The new bill addresses PPP loan payments, FFCRA benefits, Payroll tax relief, and more. Read on to learn the stipulations of the new stimulus package and what it means for your business.

1. Payroll Protection Program Updates.

From the CARES Act’s onset, the IRS has refused to say that any expenses paid by a PPP Loan were tax-deductible. However, the new bill expressly states any expenses paid with a PPP loan are tax-deductible. Furthermore, if you receive EIDL grant money, the money is not taxable income. Additionally, any expenses paid with this money are tax-deductible as well.

Another change to the PPP loans allows borrowers to borrow more money. Originally, borrowers were only allowed one loan. As more money because available and the pandemic continued, the banks denied these borrowers additional funds. Now, these borrowers can apply for additional funding under the PPP.

Now the SBA has 17 days to provide any guidance on these new provisions. The new provisions will allow the following:

  • Borrowers who returned any part of their original loan can apply to receive the difference of the loan.
  • Anyone who did not accept the full amount of the loan can apply for the maximum benefit offered.
  • Businesses must have 300 or fewer employees and have a loss of at least 25% in gross receipts within the 2020 quarter and its comparable 2019 quarter.
  • Non-profit businesses organizations, like the chamber of commerce, real-estate boards, trade boards, and professional football organizations to apply for the loan if they have less than 150 employees, less than 10% of their receipts come from lobbying, and lobbying is less than 10% of what the organization does.
  • Housing coops with less than 200 employees to apply for the loan

The provisions insist businesses comply with the following rules:

  • New loans cannot be more than $2 million. The total amount borrowed cannot exceed $10 million.
  • Loans for businesses are 2.5 times payroll expenses. For foodservice businesses, it is three times payroll.

Additional changes include the right for businesses who received a PPP loan also to receive EIDL funds. The borrowers do not need to reduce any loan funding by the amount received in EIDL funds.

The SBA must release a loan forgiveness form within 24 days of the bill taking effect if the loan is less than $150,000. Businesses must state that they followed all loan requirements and provide the required proof. The bill also requires that you maintain all loan records for three to four years in case of an audit.

The SBA also must release a new audit plan to Congress within 45 days of passing the bill.

PPP loans may now get used to cover more expenses, including:

  • Operation costs
  • Property damage
  • Purchase orders and supplier expenses
  • Expenses related to COVID compliance rules
  • Group healthcare costs, life insurance premiums, and of course, payroll.

The new PPP loans and their provisions will now expire on March 31, 2021.

2. Employee Retention Credits

The ERC now expires on July 1, 2021. In addition, the following changes will apply:

  • Credit is increased to 70% of employee wages (up from 50%)
  • The wage limitation is now $10,000 per quarter.
  • Businesses must show a 20% reduction in gross receipts in a quarter (down from 50%)
  • Even businesses with a PPP Loan can receive the ERC. Wages used in the ERC request cannot get used as a forgivable PPP loan expense.

3. Payroll Tax Deferral

The bill also addresses the payroll tax deferral program. The withheld taxes do not get repaid until December 31, 2021, instead of April 30, 2021.

4. FFCRA Extension

The FFCRA provides paid sick leave and paid family and medical leave to employees in companies with under 500 employees. Employers receive a refundable tax credit for money paid under the program to employees with Coronavirus or childcare issues due to COVID. The benefit expires on December 31, 2020.

The new stimulus package extends the program through March 31, 2021. However, the program is no longer mandatory. Employers may voluntarily offer benefits to employees who need coverage and have not exhausted the benefit to date. If employers choose to offer the benefit, they will receive a refundable tax credit.

5. New Provisions

The new bill offers two new provisions benefiting small businesses.

  1. Business meal expenses. Any food or beverages provided by restaurants after December 31, 2020, and before January 1, 2023, are fully tax-deductible under the bill.
  2. Live venue grants. Live theater, producers, performing arts centers, museums, theaters, and promoters with a 25% reduction in revenue from quarter to quarter may receive a grant. The grants must get uses for payroll costs, independent contractor pay, and other operational costs, like rent and mortgage interest. IT may also cover state and local taxes, advertising, and insurance payments.

Workplace HCM Can Help You Get the Assistance You Need.

Your business may be entitled to additional benefits under the new stimulus package. To help receive the benefits you need to continue operations through the pandemic, contact our HR experts at 856.334.9711. We can help you apply for any funds you need and get any tax credits you should receive under the law.

**Please note, the provisions of the new stimulus bill may change before signing into law. **

**Workplace HCM will update you as changes get made. **

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