What You Need to Know About the New COVID-19 Relief PackageBy
Note: The new Biden Administration is proposing additional relief measures so look out for more information the coming weeks.
Over the last few weeks we’ve all heard the talk about the new $900 Billion COVID-19 relief package, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. At this point, you may have even received a stimulus check. But what does it mean beyond that? We dove into this new relief package to find out the most important things for you to know.
What is in the new stimulus package?
The new stimulus package provides additional COVID-19 relief measures for individuals, small businesses and specific industries who have been hurt by the pandemic. The main relief measures include:
- More Economic Impact Payments: Another round of payments of up to $600 per person for individuals making up to $75,000/year or couples making up to $150,000/year. There is also a payment of $600 per dependent child. These payments have already started going out, and you might have seen this in your direct deposit account. If you haven’t received your payment yet but think you are eligible, you can track your payment on the IRS website. There are still proposals on the table to increase payments to Americans even further, so keep an eye out for the latest information on this.
- Increased Unemployment Assistance: After the last round of federal supplemental unemployment benefits expired in July, the new package provides for:
- Additional $300/week in unemployment benefits on top of state benefits through March 14, 2021.
- Extending the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of unemployment to individuals who max out their weeks of state unemployment.
- Extending the max number of weeks of unemployment to 50 weeks.
- Extra $100/week to individuals who have both self-employment and regular wage income, where the unemployment calculation didn’t take into account their self-employment income.
- Rental & Eviction Assistance: Extends the federal eviction ban until January 31, 2021 and provides an additional $25 billion in emergency assistance for renters. Details on the emergency renter assistance program are still being released.
- Reboots PPP Loans: Provides for another $284 billion in Paycheck Protection Program (PPP) loans through Small Business Administration (SBA) lenders, including extending priority to minority-owned and other underserved community lenders. PPP applications reopened for underserved lenders on January 11, 2021. See “What is being offered in the PPP reboot?” below.
- Other Small Business Relief: Provides up to $20 billion in Economic Injury Disaster Loans (EIDL) from the SBA to businesses in low-income communities. You can apply for an EIDL on the SBA website. The new law also provides $3.5 billion for continued SBA debt relief payments to small businesses, and an additional $2 billion for SBA lending process improvements.
- Aid to Cultural Institutions and Live Venues: Up to $15 billion in aid for independent movie theaters, live venues and cultural institutions. This may include aid for museums, live music venues and independent theaters. The government has not released full details on this yet, so keep an eye out for more information from the US Treasury.
- Business Tax Relief: Extends the Employee Retention Tax Credit (ERTC) that the CARES Act created, and allows PPP borrowers who had their loans forgiven to deduct the costs covered by the PPP loan from their income on their federal tax returns.
- Other Relief: Other relief provisions include:
- More relief to the transportation industry, including airlines and mass transit agencies.
- Additional funding for vaccine distribution and COVID-19 testing.
- Up to $82 billion in aid to K-12 schools and universities.
- Up to $12 billion in support to lenders focused on low-income and minority communities.
How does the new COVID-19 relief package compare to the CARES Act?
The new law extends many of the programs already created in the CARES Act, which were set to expire or had already expired. It also makes several adjustments to help groups or industries that may have been left behind by the prior programs, including small businesses in low-income and minority communities and cultural venues. In addition, the new law earmarks funds to support the COVID-19 vaccination efforts.
What is being offered in the PPP reboot?
The new stimulus package allocates another $284 billion to reopen PPP loans for small businesses. The first round of the PPP had closed over the summer. This time, it changes and clarifies some of the requirements:
- Reopens the original PPP: First-time small business borrowers can get PPP loans under the original program (PPP1) again until March 31, 2021 or when the new funds run out. Small businesses must meet largely the same eligibility rules as the first time around, like having fewer than 500 employees. Priority is first going to be given to lenders who service low-income and minority communities.
- Creates a PPP2 Program: Small businesses that received PPP loans the first time and have used all those funds can now apply for up to $2 million “PPP2” loans. To qualify, businesses have to show, among other things, that they experienced at least a 25% decrease in business in at least one quarter in 2020 compared to the same period in 2019, and that they have fewer than 300 employees (vs. 500 for PPP1 loans).
- Changes some of the PPP terms: The new PPP program both makes some criteria stricter to prevent abuse of the program, and also loosens some requirements to provide more flexibility. For example, all PPP borrowers can now choose their forgiveness end date to be during any period 8-24 weeks after the loan pays out. More business expenses can now also count towards forgiveness, including some supplier and insurance costs.
You can find more information on the new round of PPP loans on the SBA website. Some companies like Lendio are allowing small businesses to apply for these loans online again through their websites. You should also check with your bank or existing business lender ASAP to see if you can apply through them.
What if I already applied for PPP?
Check with your PPP lender ASAP to learn the status of your application and whether you can apply for this new round. If you received a PPP loan last time, ask whether you’re eligible for the new PPP2 loans.
How do I know if I’m eligible for these programs?
You should check the IRS and SBA websites to check if you might meet the requirements for the economic impact payments, EIDL and PPP loans. If you think you might qualify for unemployment benefits, you should contact your state unemployment office. We also recommend speaking to your legal and financial advisors if you have any questions about your particular situation.
When can I apply for these programs?
EIDL loans and PPP loan applications are open as of January 11, 2021. The PPP loans will first give priority to borrowers in low-income and minority communities. The additional unemployment benefits will be rolled out to each state, and each state’s timing may vary. Check with your state unemployment office for your state’s timeline. Details about other programs are still being released, so look out for more information in the coming weeks.
Where can I find more information?
Check the US Treasury, IRS, SBA and your state and local government websites regularly for the most up to date information on these programs. If you think you may want to apply for a PPP loan, contact your bank or business lender to see if they are offering this program.
Looking for even more details? Our friends at Main Street Alliance are hosting a webinar on the new and expanded federal relief package and how it may benefit your small business. Sign up to watch it live on January 14th or to receive the replay.
Previous PPP Coverage
- Important Information About the Paycheck Protection Program (PPP)
- How To Know if You Should Apply for the Paycheck Protection Program (PPP)
- Paycheck Protection Program (PPP) Loans FAQ
Information and guidance on the new Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and other COVID-19 relief programs is changing rapidly. Regularly check federal, state and local government websites for the most up-to-date information. This post is for informational purposes only, and is not intended to provide legal, financial or tax advice. We recommend that you consult your legal, financial and tax advisors about your personal circumstances.
Photo Credit: Sachiczko/Shutterstock.com
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