Vermont Business Magazine On December 27, 2020, the $900 billion “Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act” (Economic Aid Act) was signed into law along with a $1.4 trillion federal omnibus FY 21 appropriations bill. Community-based lenders were allowed to start processing application Monday and all other lenders may open up applications for new or continuing PPP loans starting Wednesday. This is the update to the $2.1 trillion CARES Act passed in March 2020.
Additionally, Congress passed a veto-override to enact the $740 billion National Defense Authorization Act on December 23, 2020, which includes support for creative arts therapies.
Key PPP updates include:
- PPP borrowers can set their PPP loan’s covered period to be any length between 8 and 24 weeks to best meet their business needs;
- PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures;
- The Program’s eligibility is expanded to include 501(c)(6)s, housing cooperatives, direct marketing organizations, among other types of organizations;
- The PPP provides greater flexibility for seasonal employees;
- Certain existing PPP borrowers can request to modify their First Draw PPP Loan amount; and
- Certain existing PPP borrowers are now eligible to apply for a Second Draw PPP Loan.
A borrower is generally eligible for a Second Draw PPP Loan if the borrower:
- Previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses;
- Has no more than 300 employees; and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
The new guidance released includes:
- PPP Guidance from SBA Administrator Carranza on Accessing Capital for Minority, Underserved, Veteran, and Women-owned Business Concerns;
- Interim Final Rule on Paycheck Protection Program as Amended by Economic Aid Act; and
- Interim Final Rule on Second Draw PPP Loans.
- New SBA Guidelines opening a new First Round of Paycheck Protection Program and Application, Forgivable Loan Applications, Forgiveness, Tax Implications, and no longer need to deduct EIDL Advances! ($147.5 billion)
- New SBA Guideline creating a Second Draw and Application of PPP loans to current borrowers ($137 billion)
- Newly replenished EIDL Loan and Advances (not a second draw) – already open to apply now ($20 billion)
- New Shuttered Live Venue Operators and Talent Representatives available to nonprofit, for-profit, and government owned or operated performing arts venues and museums ($15 billion)
- New Pandemic Unemployment Assistance for gig workers, W2 employees, and now “mixed earners”
- New IRS Stimulus Checks of $600 per taxpayer (phasing incrementally out after $75,000 adjusted gross income) and $600 for each of the tax filer’s dependent children 17 years old and younger)
- New expanded and extended charitable tax deductions for non-itemizers up to $300 per tax filer, instead of $300 per tax return. (ie- married, joint filers can deduct up to $600 now)
- New retroactive and upcoming NEA and NEH grants that can be awarded for general operating support.
- New funding for creative arts therapies within the U.S. Department of Defense