There’s a lot to unpack from the $900B Coronavirus Response and Relief Supplemental Appropriations Act of 2021 signed on Sunday, December 27th. We’re still diving into the details and awaiting additional guidance — please stay tuned for updated resources.

In the meantime, watch our quick video and review the summary below to learn more about relief programs to keep on your radar. And if you’re interested in PPP, join us on January 5 for a webinar on how to prepare for the next round of loans.

• PPP Expense Deductibility: Permits expenses used with PPP loans to be deductible. This may impact “basis” for s-corp entities, so please discuss impacts of PPP loan forgiveness with your CPA.
• FFCRA Paid Leave Tax Credits Extended to March 31, 2021: This extension allows eligible employers to claim tax credits for FFCRA-like wages through the end of Q1 2021. It does not extend the requirement to provide FFCRA leave after December 31, 2020. No additional time for those having to quarantine again, but FFCRA credits continue into Q1.
• Employee Retention Credit (ERC): Extended until June 30, 2021; expanded payroll tax credit of up to 70% on wages up to $10,000 per quarter (previous ERC program was 50% of wages up to $10,000 per year, so this is much more generous). ERC can be used by PPP borrowers as long as the wages used for the credit were not from PPP wages.
• Meals Deductions: Restores business meals deduction from 50% to 100% for 2021 and 2022.

This stimulus bill allows certain borrowers to take a “second draw” PPP Loan if they can show a 25% drop in gross receipts comparing any quarter in 2020 vs. 2019. It also provides funding for first-time PPP loans with revisions to 2020’s program.

Summary of “2nd Draw” PPP Loan Terms

• PPP Loan Amount: Based on average total monthly payroll costs incurred during either 2019 or prior 12 months (taking the lessor unless you are a “NAICS 72” entity). Definition of monthly payroll costs similar to Round 1.
• 25% Gross Receipts Reduction: Appears they will require you to compare quarterly periods strictly thus Q1 2019 vs. Q1 2020, etc. However, there are special criteria for new entities that were not in business during part or all of 2019.
• Streamlined Application for Loans Under $150K: Requires a one-page streamlined application for PPP loans under $150K. You will not have to substantiate 25% reduction at time of loan application if it is your first PPP loan. However, you will have to document impact/reduction when applying for PPP Second Round forgiveness.
• Seasonal Employer Definition: “Does not operate for more than 7 months in any calendar year or had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts of the employer for the other 6 months of that year.”