As Congress continues to negotiate for a COVID relief package, there are some portions that have come out, which gives us a clue as to what the final bill may look like.  As with all draft policies they are subject to change.  However, the small business portion of the bill appears consistent with several proposals floated by members of the Congress earlier this year.

It is anticipated that Congress is looking to tie this proposal with the federal government’s Omnibus spending bill, slated to be moved later this week.  If this effort fails, we will all have to wait until 2021 for much needed relief.

Below is an overview of the SBA’s Pay Check Protection and Economic Injury Disaster Loan program enhancements.

CORONA VIRUS RELIEF ACT OF 2020

Paycheck Protection Program & Small Business Support

$300 billion to Small Business Administration

Funding to allow the hardest-hit small businesses to receive a second forgivable Paycheck Protection Program (PPP) loan.

Eligibility

• Limited to small businesses with 300 or fewer employees that have sustained a 30 percent revenue loss in any quarter of 2020.
• Small 501(c)(6) organizations that are not lobbying organizations and that have 150 employees or fewer, such as local chambers of commerce, economic development organizations, and tourism offices, would become eligible for PPP.
• Loan may not exceed $2,000,000.
• Forgivable expenses are expanded to include supplier costs and investments in facility modifications and personal protective equipment to operate safely.

Forgiveness & Tax Deductibility

• Business expenses paid for with the proceeds of PPP loans are tax deductible, consistent with Congressional intent in the CARES Act.
• Loan forgiveness process is simplified for borrowers with PPP loans of $150,000 or less, requiring only a one-page attestation.

Additional Funding for PPP Recipients (Second Draw Loans)

• An eligible business may request an increase in their loan, even after it has fully been issued, if an interim final rule has changed the original loan amount in which the business was eligible to apply.
• Eligible businesses may apply for a second draw if they can show their business has experienced a 30% or more reduction in gross receipts in any quarter of 2020.

Minority and Underserved Communities

• Set-asides are included to ensure that smaller borrowers and underserved communities get the help they need, such as: for small businesses with 10 or fewer employees; for loans made by small community lenders, including Community Development Financial Institutions (CDFIs), credit unions, small community banks, Minority Depository Institutions (MDIs), and farm service lenders; and for the Minority Business Development Agency.
• Funding for independent live venue operators, including eligible independent movie theatres and museums, affected by COVID-19 stay-at-home orders.

Additional SBA Incentives

• Extension of Section 1112 of the CARES Act, which provides payment of principal, interest, and associated fees on qualifying Small Business Administration (SBA) 7(a), 504 and microloans.
• Funding for SBA loan products to increase guarantees on SBA 7(a) loans and reduce fees on 7(a) and 504 loans; provide loan subsidies for 7(a) loans; and provide Economic Injury Disaster Loan grant advances.
• Includes re-purposing of $138 billion in unspent allocations to be reinvested in the PPP program.

Unemployment Assistance

• Extension of all pandemic unemployment insurance programs by 16 weeks, including PUA and PEUC, from their expiration at the end of December.
• Ensure beneficiaries of Railroad Retirement Board received the same benefits as other workers.
• Federal supplemental unemployment insurance benefits expanded by $300 per week for 16 weeks, from the end of December into April 2021.
• $1 billion for state systems for technology modernization and fraud prevention.
• Small administrative adjustments (e.g., to certification requirements and overpayment standards).