President Trump signed the new $900 billion stimulus bill into law on Sunday December 27 and, as of this morning, it’s all action across the various government departments to translate and implement what is one of the largest bills with 5,593 pages of text!

As with the CARES Act, there will be questions that can only be fully answered once we receive more guidance that will be issued over the coming weeks.

The new deal covers both a new round of PPP Funding along with updates on the earlier PPP program and the SBA Debt Relief programs.

Below, is a high level summary of these:

  1. Round 2 PPP Funding is available for businesses who can clearly show that revenue related cash receipts are down at least 25% in one 2020 calendar quarter compared to the same calendar quarter in 2019.
    • To be eligible, you must have less than 300 employees and used (or will use) the full amount of your first PPP loan;
    • You do NOT have had to received forgiveness from your previous lender before applying for PPP Round 2;
    • Loan amounts will be up to 2.5x your average monthly payroll costs during either (a) the last 12 months or (b) calendar year 2019 whichever is greater, up to a maximum of $2m. For harder hit industries such as restaurants or food businesses, the loan amounts will be up to 3.5x your payroll;
    • Forgivable expenses will equal the sum of your 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 same 60%:40% between payroll and non-payroll costs will be used to calculate forgiveness.
  2. Round 1 PPP & EIDL Funding
    • If you received a PPP loan in the first round, the money you spent with the funds for approved expenses is now tax-deductible for your 2020 tax returns;
    • The forgiven PPP and EIDL amounts are now treated as non-taxable income;
    • If you received one of the EIDL grants up to $10,000 and also received a PPP, the EIDL grant will no longer become a PPP loan that is not forgivable;
    • If you received six months of capital and interest repayments fee on a pre-existing SBA loan, these financial benefits will no longer be considered taxable income;
    • If you either received or applied for the original EIDL grants and received less than the full $10,000 (or even nothing at all) and also meet the qualifications determined, you can apply for the balance up to the full $10,000 even if your EIDL Application was not approved, subject to certain criteria.
  3. SBA Debt Relief Program
    • For businesses who had an SBA Loan period to February 2020 and received 6 months of payment relief, as of February 2021, you will receive an additional 3 months of relief capped at $9k per month
    • New SBA loans that are approved through to Sept 30 or until the funding granted runs out will also have 6 months of repayments waived so, as an example, if you are approved for $350,000 the monthly repayment would be $4.2k per month saving you over $25k that will be treated as non-taxable income. Moreover, all associated fees will also be waived.

One other side note that may be of interest, page 4,946…starting Jan 1, 2021 and through to Dec 31, 2022, business meals are 100% deductible if purchased from a restaurant. So given your favorite restaurant a little boost especially as they’ve really are suffering badly through all of this horrible mess.

Finally, as always, we are just sharing our interpretation of the business impact of the latest bill and we strongly recommend you contact your advisors for formal guidance and advice.

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AllCents Consulting, LLC,
Phone: (310) 465 9248