What’s in the new stimulus?

Funds for PPP, EIDL, CDFIs, MDIs, etc., and tax changes

      New COVID-19 relief and economic stimulus legislation was signed by the president and became law on Dec. 27. It contains more funding for small business forgivable loans under the Paycheck Protection Program (PPP) and permits tax deductibility of business expenses paid for with those loans, among other benefits.

      The $900 billion relief package was enacted as part of the massive fiscal 2021 Consolidated Appropriations Act (see story on right).

      Key provisions affecting small business federal contractors include:

• Paycheck Protection Program (PPP) - The stimulus provides $284 billion for first and second PPP forgivable loans, and also specifies that business expenses paid for with the forgivable loans are tax deductible, overruling the stance of the Internal Revenue Service, which had said those expenses were not tax deductible. The maximum loan amount in this PPP round is $2 million, down from $10 million in the first round. Also, the Small Business Administration is required to set up a simplified loan forgiveness application process for loans of $150,000 or less.
• Economic Injury Disaster Loans (EIDL) - The law provides $20 billion for new EIDL loans to small businesses and non-profits that lost revenue due to the COVID-19 pandemic.
• CDFIs and MDIs - Community Development Financial Institutions (CDFIs) and Minority Designated Institutions (MDIs) will get $12 billion.
• Save Our Stages grants - There is $15 billion in funding for grants to live theater, music and cultural venues.
• Individual payments - The law funds payments of $600 for workers making up to $75,000 per year; $1,200 for couples making up to $150,000 a year; and $600 for child dependents.
• Unemployment benefits - The bill provides $120 billion to supplement unemployment benefits by $300 per week from Dec. 26 until March 14, 2021. Since the bill was signed by the president after Dec. 26, one week of those benefits is forfeited.
• Pandemic Unemployment Assistance is extended, covering the self-employed, gig workers, and others in nontraditional employment.
• Rental relief - There is $25 billion in emergency rental aid and an extension of the national eviction moratorium through Jan. 31, 2021.
• Other relief funding - There is $82 billion for college and school COVID expenses, $22 billion for health-related state local and tribal government expenses, and $10 billion for child care expenses.
• “Three-martini lunch” tax deduction - The law allows a 100% business expense deduction for food and beverage provided by a restaurant for meals from Dec. 31, 2020 to the end of 2022. Previously, the allowed deduction was 50%.

More information:
See this week's Column: PPP Round Deux
Journal of Accountancy : https://bit.ly/2KHXZdd
National Law Review:https://bit.ly/3rx9LaR
Bill text: https://bit.ly/3mSVB0o

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