Congress Agrees on $900 Billion Coronavirus Relief Bill - What Does it mean for Small Businesses in Arizona
As of December 20, 2020, the U.S. House of Representatives and Senate came to an agreed upon relief bill that includes $900 billion in emergency relief to those impacted by the coronavirus pandemic. The bill is still in draft form and is expected to be signed into law by President Trump later today.
This is a summary of $319 billion set aside to aid small businesses:
Paycheck Protection Plan Funding and Expansions
- Renewed funding for PPP Loans. $284 billion has been set aside for first and second loans to small business borrowers given through the Paycheck Protection Program.
- Expanded Eligibility for PPP Loans. The bill expands PPP eligibility to nonprofits, including destination marketing organizations, and local newspapers, TV and radio broadcasters.
- Second Draw PPP Eligibility. Small businesses may receive a second PPP loan if they have fewer than 300 employees and can prove that their revenue has fallen by 25%. The maximum amount for a second draw will be $2 million. Publicly traded companies will be barred from participating.
- PPP Deductibility. Congress will also allow PPP borrowers to take tax deductions for covered business expenses. In the past, the IRS has repeatedly taken the position that businesses cannot deduct otherwise deductible expenses (such as payroll or rent) if the business used PPP loan proceeds to pay those expenses.
Expansion of Employee Retention Tax Credit
The new bill extends and expands the Employee Retention Tax Credit through July 1, 2021. The bill increases the refundable payroll tax credit from a maximum of $5,000 to $14,000 by changing the calculation from 50 percent of wages paid up to $10,000 to 70 percent of wages paid up to $10,000 for any quarter. The bill clarifies that businesses will now be able to take the Employee Retention Tax Credit and participate in the PPP.
New EIDL Grants and Continued SBA Debt Relief
The new bill adds $20 billion for new EIDL grants (economic injury disaster loan program) for businesses in low-income communities, $3.5 billion for continued Small Business Administration (SBA) debt relief payments, and $2 billion for enhancements to SBA lending.
Grants for theaters and other live venues
This deal also includes $15 billion in dedicated funding for live venues, independent movie theaters, and cultural institutions. The initial grant can total up to $10 million per eligible business. A second grant, worth half the amount of the first, may also be available. The money will be for specified expenses such as payroll costs, rent, utilities and personal protective equipment.
This post will be updated with additional details as the bill becomes finalized.