Major COVID-19 Provisions in Year-End Funding Bill

December 22, 2020

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On December 21, 2020, Congress released and passed its long-awaited coronavirus relief package, which was part of a nearly 5,600 page 2021 government appropriations bill. The $900 billion COVID-19 stimulus is the result of weeks of intense bipartisan negotiations. Congress voted to approve the bill on Monday night. There are significant changes to the CARES Act and additional funding for several industry sectors. McGuireWoods Consulting has assembled an outline of what the bill includes, and does not include, as well as how it differs from the CARES Act, especially as it relates to the Paycheck Protection Program (PPP).

The Paycheck Protection Program

  1. $284 billion has been allocated for the new batch of PPP loans. Applicants may apply for their first or second loan.
  2. Creates a second loan from the Paycheck Protection Program, called a “PPP second draw” loan, for smaller and harder-hit businesses with a maximum loan amount of $2 million.
    • Recipients of a second PPP loan will need to meet three additional criteria. First, they must have 300 or fewer employees, down from 500; second, they must have used or will use the entirety of their first PPP loan; and third, they must have seen gross receipts decline by at least 25 percent for any quarter in 2020 compared to that same quarter in 2019.
  3. Loan terms. Borrowers may receive a loan amount of up to 2.5X the average monthly payroll costs in the one year prior to the loan or the calendar year. No loan can be greater than $2 million.
    • Seasonal employers may calculate their maximum loan amount based on a 12-week period beginning February 15, 2019 through February 15, 2020.
    • New entities may receive loans of up to 2.5X the sum of their average monthly payroll costs.
    • Entities in industries assigned to NAICS code 72 (Accommodations and Food Services) may receive loans of up to 3.5X average monthly payroll costs.
    • Businesses with multiple locations that are eligible entities under the initial PPP requirements may employ not more than 300 employees per physical location.
    • Waiver of affiliation rules that applied during initial PPP loans apply to a second loan.
    • An eligible entity may only receive one PPP second draw loan.
    • Fees are waived for both borrowers and lenders to encourage participation.
    • For loans of not more than $150,000, the entity may submit a certification attesting that the entity meets the revenue loss requirements on or before the date the entity submits their loan forgiveness application and non-profit and veterans organizations may utilize gross receipts to calculate their revenue loss standard.
    • Borrowers receive full loan forgiveness if they spend at least 60 percent of their PPP second draw loan on payroll costs over a time period of their choosing between 8 weeks and 24 weeks.
    • Includes set-asides to support first-time PPP borrowers with 10 or fewer employees, second-time PPP borrowers with 10 or fewer employees, first-time PPP borrowers who have been made newly eligible, and second-time returning PPP borrowers. Additionally, provides for a set-aside for loans made by community lenders.
    • Publicly traded companies are no longer eligible for PPP loans.
  4. Loan forgiveness. Borrowers of a PPP second draw loan would be eligible for loan forgiveness equal to the sum of their payroll costs, as well as covered mortgage, rent, and utility payments, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures incurred during the covered period. The 60/40 cost allocation between payroll and non- payroll costs in order to receive full forgiveness will continue to apply.

Other Business Relief Appropriations

  1. $20 billion for the Economic Injury Disaster Loan (EIDL) Advance program.
  2. $3.5 billion for continuing the SBA Section 7(a) Debt Relief program.
  3. $2 billion to enhance SBA’s core programs, including 7(a), Community Advantage, 504, and the Microloan program.
  4. $12 billion in Community Development Financial Institution and Minority Depository Institution targeted emergency investments to help low-income and minority communities.
  5. Extends the period by which employers can defer payroll taxes to April 30, 2021 and paid back by January 1, 2022.
  6. Extends both the Pandemic Unemployment Assistance (PUA) program and Pandemic Emergency Unemployment Compensation (PEUC) program.

Key CARES Act Programs For Individuals

  1. $120 billion for a 16-week extension of all unemployment assistance, with a $300 supplement per week.
    • Extended to March 14, 2021.
  2. Provides economic impact payments of $600 for individuals making up to $75,000 per year and $1,200 for couples making up to $150,000 per year, as well as a $600 payment for each dependent.
  3. An extension of the eviction moratorium until January 31 and $25 billion for emergency rental assistance.
  4. Extends credits for paid sick and family leave through March 2021.
  5. An extension and expansion of the Employee Retention Tax Credit (ERTC).
    • The ERTC is extended until July 1.
    • Increases the credit rate from 50 percent to 70 percent.
    • Raises the limit on per-employee creditable wages from $10,000 for the year, to $10,000 for each quarter.
    • Expands eligibility for the credit by reducing the required year-over-year decline in gross receipts from 50 percent to 20 percent.
    • Modifies the threshold for treatment as a ‘large employer’ by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees.

Industry-Specific Provisions

Transportation: $45 billion

  1. $15 billion for the Airline Payroll Support Program.
  2. $14 billion for transit agencies.
  3. $10 billion for state highways.
  4. $1 billion for airline contractor payroll support.
  5. $2 billion for airports and airport concessionaires.
    • No less than $200 million will be available to sponsors of primary airports to provide relief from rent and minimum annual guarantees to on airport car rental, on-airport parking, and in-terminal airport concessions.
      • “The sponsor shall provide relief from rent and minimum annual guarantee obligations to each eligible airport concession in an amount that reflects each eligible airport concession’s proportional share of the total amount of the rent and minimum annual guarantees of all the eligible airport concessions at such airport.”
  6. $2 billion for the private motorcoach, school bus, and ferry industries.
  7. $1 billion for Amtrak.

Live Venues: $15 billion

  1. Grants for shuttered live venues, theaters, museums, and zoos.
    • $2 billion will be set aside for eligible entities that employ 50 full-time employees or fewer.

Agriculture: $26 billion

  1. $13 billion in direct aid to farmers who have suffered losses due to the coronavirus.
  2. Increases the monthly SNAP benefit level by 15 percent based on the June 2020 Thrifty Food Plan through June 30, 2021.
  3. $400 million for the Emergency Food Assistance Program.
  4. $100 million in additional funding for specialty crop farmers and the Specialty Crop Block Grant Program.
  5. $100 million to support local farmers, farmers markets, and value-added production for farmers and outlets.

Education/Schools: $82 billion

  1. $54.3 billion for the Elementary and Secondary School Emergency Relief Fund (Public K-12 schools).
  2. $22.7 billion for the Higher Education Emergency Relief Fund.
  3. $20 billion distributed to all public and private non-profit institutions of higher education.
  4. $4.05 billion for the Governors Emergency Education Relief Fund.
  5. $1.7 billion to Minority Serving Institutions, including:
    • $727 million to historically black colleges and universities.
    • $320 million to Hispanic Serving Institutions.
    • $242 million to the Strengthening Institutions Program.
  6. $908 million to for-profit colleges to provide financial aid grants to students.
  7. $818.8 million in relief for outlying areas and the Bureau of Indian Education.

Major Provisions Excluded From The Package

  1. $160 billion for state and local governments.
  2. Business liability protection.