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Quick Analyisis of New Federal Relief Plan

December 21, 2020
Good news on the Federal Relief front! A silver lining in this challenging week is that Congress has reached a bipartisan deal that will likely pass the House and Senate today. This is a bright spot as we head into the Holidays and are faced with many operational hindrances. The final text is finally out. Below is a quick analysis of what's included thanks to Matt Hetrick at the Harmony Group. 
 
  • PAYROLL PROTECTION PROGRAM (PPP)
    • Who Qualifies: If your business has experienced a quarter this year with a sales drop of 25%+ vs last year, you will likely qualify for another loan from the PPP program.  
    • What You Get: Businesses with NAICS codes starting with 72 (i.e. restaurants, bars, etc.) will be at a multiple of 3.5x 2019 average monthly payroll. Other businesses will be at 2.5x average monthly payroll. 
    • When You Can Apply: Applications will likely be accepted in January, which means now is the time to get your ducks in a row and speak to your accountant, bank, lender and attorney.  
    • How The Money Can Be Spent: These funds can be spent on more types of expenses than the first PPP loans. Operating expenses and suppliers can be paid from these loans, as well as payroll, rent, utilities, etc. like before. There is also the ability to spend funds on ‘‘(IV) an expansion of additional indoor, outdoor, or combined business space”. This expansion is now applied retroactively, as well, for anyone who hasn’t received forgiveness. The law is written broadly, so we will see what Treasury allows. 
    • Taxability of PPP Forgiveness: Congress has overridden the IRS and made it explicit that the expenses used to generate PPP forgiveness WILL be tax deductible. This is a huge win for taxpayers. 
  • PANDEMIC UNEMPLOYMENT ASSISTANCE - Pandemic Unemployment Compensation support has been extended for another 11 weeks (through March 14th), with a $300 Federal supplement to any state level benefits.  
  • FFCRA and FFCRA CREDIT EXTENSION  - The FFCRA Pandemic leave program and credits for payments made under it are extended through March 31. 
  • STIMULUS CHECKS - $600 Stimulus Checks to individuals earning less than $75,000 annually. 
  • SBA LOAN PAYMENTS - The Federal government will pay for another 6 payments on existing SBA loans.
  • TARGETED ECONOMIC INJURY DISASTER LOANS (EIDLs) - Another round of EIDL loans will be released for entities that meet certain criteria. Stay tuned for more information. 
  • EMPLOYEE RETENTION TAX CREDIT (ERTC) EXPANSION - The Federal government will pay for 70% of your first $10,000 of wages per employee during periods when your business is operating under either partial or full shutdowns through June 30, 2021. The ERTC provides immediate relief - it’s a credit each time you run payroll, not at the end of the year, meaning you get money back up front - and will be accessible immediately.