Business Owners’ Guide to the Consolidated Appropriations Act

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Updated as of January 20, 2021

The highly anticipated Consolidated Appropriations Act was passed by Congress and signed into law, bringing back the popular Paycheck Protection Program (PPP) in addition to other COVID-relief initiatives for small businesses.

We’ve provided a summary of the key provisions below to help you understand the benefits for small businesses that are included in the relief package. This page will be updated with new information as we receive it.

Pursuit’s PPP application is now open, and you can start your application and review PPP resources and guides in our PPP Application Information Hub.

Second Draw Paycheck Protection Program loans

The Act made an additional $284 billion in Paycheck Protection Program (PPP) funding available to small businesses struggling with revenue losses and temporary closures due to COVID-19. The good news? Both business owners that received a PPP loan from the first round AND new PPP borrowers are eligible for funds.

The Second Draw PPP program has some key updates from the original launched last April. Notably, businesses applying for a second PPP loan must be able to demonstrate a 25% reduction in revenue when comparing 2020 figures to 2019.

The program still calls for businesses to be able to borrow up to 2.5x of their average monthly payroll, but limits the maximum loan amount to $2 million. In addition, accommodation and food service businesses–two industries hit particularly hard by COVID–can apply for up to 3.5x of their average monthly payroll.

You can view full details, terms and eligibility for the Second Draw program on our PPP product page.

Loan forgiveness updates

The Act simplifies the forgiveness application process for PPP loans under $150,000 as follows:

  • Your business will receive forgiveness if you sign and submit a one-page certification to your PPP lender that includes a description of:
    • The number of employees you were able to retain because of the covered loan
    • The estimated total amount of the loan spent on payroll costs
    • The total loan amount
  • You must also attest that you accurately provided the required certification and complied with PPP loan requirements.
  • Additionally, your business must retain relevant records related to employment for four years and other records for three years.

Notably, the Act repeals the section of the CARES Act that required PPP borrowers to deduct the amount of their Economic Injury Disaster Loan (EIDL) from their PPP forgiveness amount. As such, if your business received a PPP loan and an EIDL advance, you do not need to subtract the amount of the advance when applying for PPP forgiveness.

Additional eligible expenses

The Act also expands the type of expenses that can be forgiven, allowing greater flexibility for small businesses. The following expenses are now allowable and forgivable uses for PPP funds:

  • Covered operations: Payment for any software, cloud computing, and other human resources and accounting needs.
  • Covered property damage: Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.
  • Covered supplier: Payments to a supplier pursuant to a contract, purchase order, or order for goods that were in effect prior to receiving the PPP loan that are essential to your operations when the payments were made. Supplier costs for perishable goods can be made before or during the life of the loan.
  • Covered worker protection expenditure: Personal protective equipment and costs that you incurred to help your business comply with Federal, State, or local beginning on March 1, 2020.

Small business debt relief program

The Act passed on December 27, 2020 extends the small business debt relief program that was originally established by the CARES Act on March 27, 2020. The legislative language indicates that certain SBA loans (7a, 504, Community Advantage and Microloans) will be eligible for payment relief under Section 1112. We are awaiting further guidance from SBA regarding the eligibility requirements and will update this guide when information is available.

Tax treatment

The Act designates all payments on principal and interest made by SBA through the small business debt relief programs as non-taxable income. This applies retroactively to any payment made as part of this program, and for all new payments as described in the section above.

Need additional assistance?

Many states and municipalities are providing assistance programs for small business, and you should check with your local Chamber of Commerce to see what’s available in your area. You can also view a list on our main COVID-19 business resources page.

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