Covid-19 Relief Bill Provides Long-Awaited Funding to Small Businesses and Individuals

December 27, 2020

On Monday, December 21, 2020, Congress passed a $900 billion COVID-19 relief bill known as the Coronavirus Response and Relief Supplemental Appropriations Act (the “Bill”) after months of intense negotiations. The 5,593-page legislation—by far the longest bill in history—was signed into law by President Donald Trump nearly a week later, on December 27. This alert identifies two key aspects of the Bill: aid for small businesses and individual benefits.

Aid for Small Businesses

The Bill provides $284 billion to the U.S. Small Business Association (“SBA”) for both first and second Paycheck Protection Program (“PPP”) forgivable small business loans. It also allocates $20 billion to provide Economic Injury Disaster Loan (“EIDL”) Grants to businesses in low-income communities.

PPP Eligibility: PPP loans will be available to first-time qualified borrowers and to businesses that previously received a PPP loan. Borrowers may receive a loan of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year subject to the new $2 million maximum. Moreover, the Bill provides restaurants and food businesses a larger loan amount of 3.5 times their average monthly payroll costs up to $2 million. The SBA will provide instructions on application procedures in the days following the enactment of the Bill.

Eligible first-time borrowers include businesses with 500 or fewer employees that are eligible for other 7(a) SBA loans; sole proprietors; independent contractors and eligible self-employed individuals; not-for-profits, including churches; and accommodation and food services operations with fewer than 300 employees per physical location.

Previous PPP recipients may apply for another loan of up to $2 million if they have 300 or fewer employees, have used or will use the full amount of their initial PPP loan, and can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019. Borrowers that returned all or part of a previous PPP loan are eligible to reapply for the maximum amount available to them.

Loan Forgiveness Eligibility: Similar to the first two rounds of PPP loans, borrowers must spend no less than 60% of PPP funds on payroll expenses to be eligible for full loan forgiveness, but borrowers can now specify the covered loan period—as short as eight weeks and as long as 24 weeks.

The costs eligible for loan forgiveness include payroll, rent, covered mortgage interest, and utilities. This new round of PPP loans also makes the following expenses potentially forgivable:

  • Covered worker protection and facility modification expenditures, including personal protective equipment, to comply with COVID-19 federal health and safety guidelines to make a business COVID-19 safe,
  • expenditures to suppliers that are essential at the time of purchase to the recipient’s current operations (as long as the contract to purchase those goods was in place before the PPP loan application), and
  • covered operating costs such as software and cloud computing services and accounting needs.

Forgiveness Application Process: The Bill creates a simplified forgiveness application process for loans of $150,000 or less.

Tax Ramifications: Forgiven PPP loans will not be taxable to the borrower; however, business expenses paid with forgiven PPP loans are tax deductible. Additionally, EIDL Grants and Advances are also not taxable.

Community-Level Loans: In an effort to address the need for additional access to financial institutions, the Bill includes $15 billion for loans from community development financial institutions (“CDFIs”), minority-depository institutions (“MDIs”), and SBA 504 and microlenders. An additional $15 billion is provided for loans from credit unions and farm credit institutions.

The Bill targets the most vulnerable small businesses, as well as those that have been most affected by COVID-19 by allocating another $20 billion for advance payments from the Economic Injury Disaster Relief program for businesses in minority communities.

Employer Retention Credit Program: The Employee Retention Tax Credit (“ERTC”)—designed to help employers keep employees on the payroll amid COVID-19 business opening restrictions—has been expanded and extended through July 1, 2021.

The Bill expands the ERTC in the following ways:

  • Makes the credit available to public colleges and universities as well as public entities whose primary function is providing medical or hospital care,
  • increases the credit from 50% to 70% of qualified wages,
  • increases qualified wages from $10,000 total to $10,000 per quarter,
  • expands eligibility by reducing the reduction in the gross receipts test from 50% to 20%, and
  • increases the 100-employee delineation for determining qualified wages to 500 employees.

Individual Benefits

The Bill provides for direct payments of $600 to individuals making up to $75,000 per year and $1,200 to couples making up to $150,000, with an additional $600 payment per dependent child. The size of the payment decreases for individuals earning more than $75,000 per year and is unavailable to those earning more than $99,000.

The Bill also includes additional unemployment benefits of $300 per week on top of state unemployment insurance. However, the Bill only ensures these additional benefits for 10 weeks.

Notably, the Bill provides $25 million in emergency rental aid and extends the national federal eviction moratorium through January 31, 2021.

The articles on our website include some of the publications and papers authored by our attorneys, both before and after they joined our firm. The content of these articles should not be taken as legal advice. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views or official position of Robins Kaplan LLP.


Anthony A. Froio


Managing Partner
Chair of Executive Board

Samia S. Young

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