The Coronavirus Response and Relief Supplemental Appropriations Act of 2021 (CRRSAA) was signed into law on December 27, 2020 as part of the Consolidated Appropriations Act of 2021, a larger government appropriations bill. Here’s what it means for small businesses.
We’re bringing you this information in an effort to help you stay up to date on the small business implications of the new 2021 Coronavirus Response and Relief Supplemental Appropriations Act. As with any legislation, especially if it is subject to ongoing developments, please consult your tax, accounting, and legal tax advisors before making any financial decisions for your business.
The new COVID-19 relief bill provides additional assistance to small businesses, nonprofits, and venues impacted by the COVID-19 pandemic. Specifically, it:
The bill reopens the Paycheck Protection Program, making it possible for more businesses to apply for the first time. Businesses who received a PPP loan in 2020 may be able to apply for a “second draw” PPP loan. The 2021 bill expands the types of expenses that PPP funds can cover and makes it easier for businesses that took out loans worth less than $150,000 to have their PPP loans forgiven.
A number of improvements have been made to the Paycheck Protection Program. The new bill:
The bill also reopens the Economic Injury Disaster Loan (EIDL) grant program, and allocates additional funding for it. This will allow eligible businesses to receive up to $10,000 in EIDL grants.
Priority for the full amount of the EIDL grant will be given to small businesses that:
The EIDL and the PPP programs are also popularly called “SBA disaster loans,” although the term refers to a broader range of disaster relief the SBA offers.
The bill allocates $15 billion in grants to support live venues including independent movie theaters, concert halls, museums, and zoos that have experienced significant revenue losses. The maximum per grant is $10 million. Grants must be used on expenses such as payroll, rent, utilities and personal protective equipment.
The bill significantly expands the Employee Retention Tax Credit (ERTC), effective January 1, 2021 and expires on June 30, 2021. The prior credit was 50% on $10,000 in qualified wages per year (or a maximum of $5,000 per employee). The new credit is 70% on $10,000 in wages per quarter (or a maximum $14,000 per employee through June 30th).
The new law also expands employer eligibility. Prior to the new law, the ERTC applied only to those employers that experienced a decline in gross revenues of over 50 percent between comparable quarters in 2019 and 2020. It now applies to employers that experienced a decline of more than 20 percent.
In addition, employers with 500 or fewer employees can now claim the ERTC for wages paid to employees whether or not the employees are providing services. (The cap was previously 100 employees.)
Finally, businesses are now eligible to receive a PPP loan as well as claim the Employee Retention Tax Credit—but the two forms of aid may not cover the same payroll expenses. In other words, if you run payroll using PPP loan funds in May 2021, you cannot also claim the ERTC for those wages during that month.
[Source: US Chamber of Commerce]
The CRRSAA provides financial assistance to individuals suffering from economic impacts of the COVID-19 pandemic via direct payments and enhanced federal unemployment benefits.
The bill extends the amount of time people can collect federal unemployment benefits (pandemic unemployment assistance), and it restarts a supplemental federal benefit on top of state benefits. The extra benefit totals $300 per week and lasts through March 14, 2021.
Those who make less than $75,000 a year will receive direct payments of $600 per individual ($1,200 per joint return for couples making less than $150,000 annually) plus $600 per child.
The bill also provides enhanced verification and requires greater transparency of the Small Business Administration’s oversight plans to ensure funds disbursed are directly benefiting eligible organizations.
This information is being presented for informational purposes only and should not be construed as legal, financial, or tax advice. Readers should contact their attorneys, financial advisors, or tax professionals to obtain advice with respect to any particular matter. Clover assumes no responsibility for any information contained on any third-party website. The Clover trademark is owned by Clover Network, Inc.