2021 COVID-19 Relief Bill: A summary for small businesses

Editorial Team

7 min read
Restaurant employee with mask

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.

What the CRRSAA means for small business

The new COVID-19 relief bill provides additional assistance to small businesses, nonprofits, and venues impacted by the COVID-19 pandemic. Specifically, it:

  • Provides funding for a second round of forgivable loans through the Paycheck Protection Program for small businesses and nonprofits experiencing significant revenue losses
  • Make programmatic improvements to the PPP
  • Provides funding for grants to shuttered venues
  • Enacts emergency enhancements to other SBA lending programs 

Paycheck Protection Program (PPP) 

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. 

Key points: 

  • Who can apply: Small businesses with employees, sole proprietors, independent contractors, and self-employed workers who were in operation on or before February 15, 2020.
  • Tax implications: Under the CRRSAA, PPP loans are non-taxable, as are the majority of business expenses paid for by the loans. The legislation also makes businesses eligible to receive both PPP loans and the Employee Retention Tax Credit (ERTC), which was not possible under the original CARES Act.
  • Deadline: Applications for new and second draw PPP loans are open now until March 31, 2021, or until funds are exhausted.
Paycheck Protection Program Second Draw Loans
  • Eligibility requirements: 
    • Have already used, or will use, the full amount of your first PPP loan
    • Have fewer than 300 employees (or no employees)
    • Demonstrate a minimum of 25 percent reduction in gross revenues between comparable quarters in 2019 and 2020 (e.g. Q1 2019 vs Q1 2020) 
    • Note: Entities with significant ties to China are not eligible for a second draw PPP loan
  • Loan amount: The maximum loan amount you can apply for is 2.5x your average monthly payroll costs, up to $2 million.
    • Employers in the Accommodation and Food Services industries (NAICS code 72) can apply for PPP second draw loans equal to 3.5x their average monthly payroll
    • Seasonal employers [should or may?] utilize average monthly payroll costs for a 12-week period anytime between February 15, 2019 and February 15, 2020.  
  • Support for minority-owned businesses: The bill provides $284.45 billion in funding for the second draw loan program. Of that, it commits $25 million for Minority Business Development Centers under the Minority Business Development Agency (MBDA) to help minority business entities with technical assistance, such as applying for PPP loans.
  • Loan forgiveness: Borrowers receive full loan forgiveness if they spend at least 60 percent of their PPP second draw loan on payroll costs over a time period of their choosing between 8 weeks and 24 weeks.
  • Set-aside contracts: The bill includes set-asides to support the following types of borrowers: first-time and second-time PPP borrowers with 10 or fewer employees; first-time PPP borrowers who have been made newly eligible; and second-time returning PPP borrowers. The bill also provides for a set-aside for loans made by community lenders.
Paycheck Protection Program Improvements

A number of improvements have been made to the Paycheck Protection Program. The new bill:

  • Eliminates the requirement that EIDL advances be subtracted from PPP forgiveness.
  • Expands PPP allowable and forgivable expenses to include supplier costs such as perishable goods, worker protective equipment, and technology operations.
  • Allows borrowers to select their loan forgiveness covered period between 8 and 24 weeks.
  • Allows borrowers to include additional group insurance payments when calculating their PPP payroll costs. This includes vision, dental, disability, and life insurance plans.
  • Establishes the loan amount calculation for farmers and ranchers to better align with recent years’ income.
  • Expands PPP eligibility to local newspapers and T.V., and radio stations previously made ineligible by their affiliation with other stations.
  • Simplifies the forgiveness application process for smaller loans up to $150,000.
  • Enhances the SBA’s ability to audit and review forgiven loans.

Economic Injury Disaster Loan (EIDL)

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:

  • Have 300 employees or fewer;
  • Are located in low-income neighborhoods; and
  • Have experienced a 30% reduction in gross revenue during any 8-week period between March 2 and December 31, 2020, compared to a comparable 8-week period before March 2, 2020. (Businesses that meet this requirement and that received less than $10,000 in EIDL funds can reapply to receive the difference.) 

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.

New grant program for live venues

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.

Expanded Employee Retention Tax Credit

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 

What the CRRSAA means for your personnel

The CRRSAA provides financial assistance to individuals suffering from economic impacts of the COVID-19 pandemic via direct payments and enhanced federal unemployment benefits.

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.

Direct payments for individuals

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.

Additional Resources


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.

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