Congress recently passed a second stimulus package in response to the ongoing coronavirus pandemic. The Cares Act 2.0 includes a number of provisions that may impact your business. Here is a summary of what we know so far.
Families First Coronavirus Response Act (FFCRA)
The law does not extend the requirement to provide employees with emergency paid sick leave or emergency paid family and medical leave past the original Dec. 31, 2020 expiration date. Private employers with fewer than 500 employees, however, will have the discretion to provide FFCRA paid leave benefits and offset the financial burden with a tax credit through March 31, 2021.
The law does not expand the amount of leave available. This means that employers cannot claim the tax credit for employees who have already utilized all of their FFCRA leave entitlement.
Note that there are many recently enacted state and local paid sick leave and paid family leave requirements that employers will still have to consider as they plan for 2021.
Paycheck Protection Program (PPP)
The legislation includes renewed funding for the forgivable business loan program for first and second-time small business borrowers.
Second-time loans will be limited to businesses with fewer than 300 employees and at least a 25% drop in gross receipts in the same quarter of 2020 compared to 2019.
“Qualifying expenses” have been expanded to include additional expenses such as covered property damage, supplier costs, or worker protection expenditures. When used for qualifying expenses, PPP loans are forgivable. The law provides a simplified forgiveness application process for loans up to $150,000.
Deductions. The bill also clarifies that businesses can deduct expenses paid with forgiven PPP loan funds. This clarification applies to old and new loans and does not include guardrails or limitations. The update is something of a technical correction and not necessarily an extension or expansion of the prior legislation.
Other Notable Provisions
The Employee Retention Tax Credit (ERTC) will now be available for businesses that participate in the PPP loan program. Previously, businesses were only allowed to opt into either the PPP or the ERTC. The tax credit will be extended through July 1, 2021. The law will increase the maximum refundable payroll tax credit by changing the calculation as it relates to the percentage of paid wages.
SBA Programs. The law includes funding for the Economic Injury Disaster Loan program (EIDL grants), which provides funding for businesses in low-income communities, additional funding for the SBA debt relief payments, and funding for enhancements to the SBA lending program. Additional funding was specifically set aside for live venues, independent movie theaters, and cultural institutions.
Deduction for business meals. The law will expand the deduction for business meals for 2021 and 2022.
Stanton Law is glad to be one of your resources for updates on COVID-19’s impact on your business. We will continue to provide updates as they become available. If you have any questions regarding this or any other legal matter, please do not hesitate to contact our experienced Atlanta employment attorneys at 404-531-2341 or online.