Between a worldwide pandemic and numerous COVID-19 relief laws to keep up with, 2020 was a whirlwind of a year. And, it looks like the start of 2021 is following in 2020’s footsteps.
After a lot of back and forth, the president signed the Consolidated Appropriations Act 2021 (also called the CAA or the “Act”) into law on December 27, 2020. The new COVID-19 legislation enhances and expands certain aspects of the CARES Act (Coronavirus Aid, Relief, and Economic Security Act).
Read on to learn all about what the new coronavirus relief bill entails and how it may impact you, your employees, and your business.
Consolidated Appropriations Act
At this point, there are probably a ton of questions running through your head. How is this new coronavirus relief bill going to affect my company? What changes will I have to make? If you’re frantically asking yourself these types of questions, don’t worry—you’re not alone.
Take a deep breath. If you’re looking for an easy-to-digest and understandable summary of the new act, you’ve come to the right place.
Let’s take a look at what changes and updates are coming along with the Consolidated Appropriations Act, shall we?
Paycheck Protection Program
One of the biggest changes with the new bill includes updates to the Paycheck Protection Program (PPP). The CAA renewed funding for the PPP for both first- and second-time loan borrowers.
If you’re a business owner, you’re likely familiar with the PPP. But just in case you need a refresher, here’s a brief rundown. The PPP was established under the CARES Act in March 2020. The PPP provides forgivable loans to small businesses to help cover payroll costs and non-payroll costs (e.g., utilities). The program incentivizes businesses to retain employees on payroll.
The PPP closed on August 8, 2020. But, the Consolidated Appropriations Act reopened the PPP through March 31, 2021. This means that business owners have until March 31 to apply for their first or second PPP loan.
So, what kind of changes did the CAA bring to the PPP? The bill:
Expands PPP loan eligibility to small nonprofits, including 501(c)(6), destination marketing organizations (DMOs), and housing cooperatives that are first-time borrowers with 300 or fewer employees (as long as their lobbying activities do not exceed 15% of their lobbying activities and the cost of their lobbying activities does not exceed $1,000,000) Gives more flexibility by allowing borrowers to select their covered period (between 8 and 24 weeks) Allows businesses to take out a PPP loan and claim the Employee Retention Credit Provides a simplified application process for loans less than $150,000 Allows for second-time PPP loan borrowers (first-time borrowers can also apply) Lets business owners use loans for additional expenses, including covered operations expenditures (e.g., business software), covered property damage (e.g., vandalism), supplier costs (e.g., items for operation), and worker protection expenditures (e.g., personal protective equipment) Second-time PPP loan borrowers
As mentioned, the CAA allows certain businesses to apply for a second PPP loan (aka a “Second Draw” PPP loan). To be eligible for a second PPP loan, you must:
Employ 300 or fewer employees Have used up your first PPP loan funds Demonstrate that your gross receipts in any 2020 quarter are at least 25% less than the same 2019 quarter Not engage in political or lobbying activities,Continue reading