Senate OKs COVID Relief Bill

December 22, 2020

On Monday evening, Dec. 21, the Senate passed 92-6 the omnibus spending bill which included $900 billion in COVID relief, specifically a new round of lending under the Paycheck Protection Program (PPP). Weighing in at more than five-thousand pages, NSBA is still analyzing the full bill, but has provided a brief video outlining the highlights of the bill as it pertains to small business here.

One of NSBA’s chief priorities for any ongoing stimulus packages has been renewing PPP and ensuring small-business relief. The language implements several changes to the previous PPP in an attempt to more specifically target small businesses, including lower threshold for “eligible small business” as well as lower loan amounts.

Among the key provisions of the new PPP language:

  • Reduces the cap on PPP loans from $10 million to $2 million;
  • The definition of eligible small businesses was dropped to firms with fewer than 300 employees and have at least a 25 percent drop in revenues between at least one quarter in 2020  and a comparable quarter in 2019;
  • Maximum loan size is 2.5 times the monthly payroll of the business with a maximum of $2M, however businesses in the accommodation and food services can get 3.5 times payroll;
  • PPP loan recipients can get full forgiveness if at least 60 percent of the loan is spent on payroll costs;
  • Set-asides were carved out for both new and second-time borrowers with fewer than 10 employees;
    • $15 billion for loans issued by mission-lenders, including community development financial institutions (CDFIs), minority-depository institutions (MDIs), and SBA 504 and Microlenders, as well as another $15 billion set-aside for certain smaller depository institutions, such as credit unions and farm credit institutions.
    • $35 billion for borrowers who were unable to apply for an initial PPP loan, of which $15 billion is for smaller borrowers with up to 10 employees or loans of up to $250,000 in low-income areas; and $25 billion for second PPP loans for the same small borrower category;
  • Full deductibility for otherwise allowable expenses using PPP funds, regardless of loan forgiveness;
  • Extends full deductibility on PPP funds retroactively, covering all loans applied for since the program’s inception under the CARES Act;
  • Simplifies the forgiveness process for loans of up to $150,000
  • Authorizes $15 billion for SBA to make grants to eligible live venues, independent movie theaters, and other cultural institutions with revenue losses of 25 percent or more;
  • Expands the allowable expenses for the loan to include existing supplier contracts and equipment and expenses related to COVID;
  • Includes 501(c)6 non-profits (which were excluded from the first round of PPP); and
  • Eliminates the requirement that EIDL loan advances be subtracted from PPP forgiveness.

In addition to the PPP, the bill will provide $20 billion in Economic Injury Disaster Loan grants as well as bolstering other SBA programs by increasing the 7(a) guarantee to 90 percent, waiving borrower and lender fees on 7(a) and 504 loans, enhancing 504 refinance options, giving Microloan borrowers an extra two years to repay their loan and creating an Express 504 loan program for small loans.

The bill includes a temporary 100 percent deduction for business meals expenses for 2021 and 2022 (the deduction otherwise is 50%) and a handful of tax extenders. There are a host of other provision, such as the surprise billing piece, which NSBA is continuing to evaluate.

The legislation directs the U.S. Small Business Administration to establish regulations within 10 days of enactment of the bill, setting the stage for an application process to open up early-January.

NSBA will be holding a webinar on Wednesday, Jan. 6 at 2:00 p.m. EST to provide a more detailed analysis on the bill and overall PPP loans, and answer your questions. Register here.