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COVID Relief Bill – Stimulus Checks, PPP & More

On Sunday, December 27th, President Trump signed a sweeping pandemic-aid bill, allowing millions of Americans to get economic relief amidst the current coronavirus pandemic. Included within the bill:

Stimulus Checks: This new stimulus package will provide a one-time stimulus check of $600 for each eligible individual. Individuals with adjusted gross incomes up to $75,000 a year will be eligible for the full payment, phased out up to $87,000. 

Married and joint filers are eligible for the full amount as long as their adjusted gross income is under $150,000 a year, phased out up to $174,000. Married couples will also receive an additional $600 for each child under 17. 

Those who file head of household are eligible for the full amount up to $112,500 adjusted gross income, phased out up to $124,500. 

These figures are based upon your 2019 tax return.

Paycheck Protection Program: The bill includes fresh PPP funding, makes 501(c)(6) not-for-profit organizations eligible for loans, and offers certain businesses facing severe revenue reductions the ability to apply for a second loan.

PPP2 loans will be available to first-time qualified borrowers and businesses that previously received a PPP loan. Previous PPP recipients may apply for a loan of up to $2 million if they:

  • Have 300 or fewer employees
  • Have 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 2019 quarter

Forgivable loans are now also available to Sec. 501(c)(6) organizations, provided they have 300 or fewer employees and do not receive more than 15% of receipts from lobbying.

PPP2 will also allow first-time borrowers from the following groups:

  • Business with 500 or fewer employees eligible for other SBA7(a) loans
  • Sole proprietors, independent contractors, eligible self-employed individuals
  • Not-for profits, including churches
  • Accommodation and food services operations with fewer than 300 employees per physical location

Borrowers that returned all or part of a previous PPP loan may reapply for the maximum amount available.

Loan Terms

Costs eligible for forgiveness include payroll, rent, covered mortgage interest, utilities, with the following potentially forgivable:

  • Covered worker protection and facility modification expenses, including personal protective equipment (PPE) to comply with COVID-19 safety guidelines
  • Expenditures that, at the time of purchase, are essential to the recipient’s current operations
  • Covered operating costs such as software, cloud computing, and accounting needs

To be eligible for full forgiveness, borrowers will have to spend no less than 60% of the funds on payroll over a covered period of either 8 or 24 weeks.

Borrowers may receive a loan of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year, with a maximum of $2 million.

Other Key PPP2 Information

The relief bill 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, and includes set-asides to support first and second-time PPP borrowers with 10 or fewer employees, first-time borrowers that have recently been made eligible, and for loans made by community lenders.

The bill also specifies that business expenses paid with forgiven PPP loans are tax-deductible, superseding previous IRS guidance.

Unemployment: $300 per week supplement from Dec. 26 through March 14, 2021. This bill also extends the Pandemic Unemployment Assistance program, providing expanded coverage to self-employed, gig workers, and others in nontraditional employment, and the Pandemic Emergency Unemployment Compensation program, which provides extra weeks of federally funded unemployment benefits.

Rental Assistance: $25 billion of rental assistance is included to protect vulnerable Americans who are at risk of losing their home. There is also a one-month extension of the federal eviction moratorium.

Additional Benefits: The stimulus package also includes funding for education ($82 billion), child care ($10 billion), clean energy and fossil fuels, and vaccine distribution, among others.

Not Included: Student loan relief was dropped from the stimulus package, though federal student loan payments are still postponed through January 31, 2021. There is also no COVID-19 liability protection for businesses, or any state or local aid.