CARES 2.0: COVID Relief Package

On December 20, 2020, the “Big Four” (House Speaker and Majority Leader, Senate Majority and Minority Leader) have secured a deal to give financial and economic relief to the American people. The package will include both economic relief and appropriations bill. The provisions included in this new true “CARES 2.0“ are aimed at the fallout from the coronavirus. This legislation will represent the second-largest economic rescue package in American history, behind the $1.8 trillion virus relief package (CARES 1.0) that was signed into law just nine months ago. Lastly, the legislation does not include liability protection. While TIA is disappointed in this provision not being in the final bill, there is still leverage on the table as state and local funding was also left out of the bill as a counter measure to liability relief.

Here are some the major provisions of this legislation:

Original PPP Loans, PPP Second Draw, and Business Support

• Support for small business: Critical funding and policy changes to help small businesses
  • The agreement includes over $284.5 billion for first and second forgivable PPP loans, expanded PPP eligibility for nonprofits and local newspapers, TV and radio broadcasters, key modifications to PPP to serve the smallest businesses and struggling non-profits and better assist independent restaurants, and includes $15 billion in dedicated funding for live venues, independent movie theaters, and cultural institutions.
  • The agreement also includes $20 billion for targeted EIDL Grants, which are critical to many smaller businesses on Main Street.
• The legislation clarifies that business owners can write-off more expenses with forgivable PPP loans, giving small companies a tax break that could amount to more than $100 billion.
  • The legislation would override an IRS decision that says business cannot claim deductions on costs, such as rent and wages, paid for with tax-free PPP money.
  • This includes payment software, cloud computing, human resources and accounting needs
  • Property damage not covered by insurance
  • Covered supplier cost including, purchase orders, contracts, etc.
  • Worker protections goods used to comply with Federal health guidelines.
• Covered period for forgiveness: borrower may elect between 8 and 24 weeks after origination.
• Creates a simplified forgiveness application for loans under $150,000. The application shall not be more than 1 page and will only include limited questions about the loan.

Important clarification: employer provided group insurance qualifies under payroll cost (health insurance, vision, dental)

Creates second loan from the PPP dedicated to smaller, harder hit businesses. These entities would be able to receive up to $2 million (may receive 2.5 times of average monthly payroll expenses), PPP Second Draw. Forgiveness comes with 60/40 payroll and non-payroll allocation.

• Here are the criteria for second draw:
  • 300 employees or less;
  • Have or will used full first round of PPP loans; and
  • Show 25% reduction in gross receipt.
• The legislation does not include liability protections for re-opening of businesses.
• This new CARES 2.0 repeals a provision that requires borrowers to deduct EIDL advance loans from their PPP loan forgiveness.
• Community Development Financial Institutions and Minority Depository Institutions: The agreement includes dedicated PPP set-asides for very small businesses and lending through community-based lenders like Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs); $9 billion in emergency U.S. Treasury capital investments in CDFIs and MDIs to support lending in low-income and underserved communities, including persistent poverty counties, that may be disproportionately impacted by the economic effects of the COVID–19 pandemic; and $3 billion in emergency support for CDFIs through the CDFI Fund to respond to the economic impact of the pandemic on underserved low-income and minority communities.
• It also includes $15 billion to reinstate payroll reimbursements to airlines, which expired two months ago, as well as $1 billion for airline contractors.
• Employee Retention Tax Credit: The agreement extends and improves the Employee Retention Tax Credit to help keep workers in the jobs during coronavirus closures or reduced revenue.
• The legislation includes a priority for President Donald Trump: an expansion of the business meals deduction -- a tax preference he narrowed just three years ago in his 2017 tax overhaul.

Vaccine Distribution and Medical

•  Accelerating vaccine distribution and defeating the coronavirus: The bipartisan COVID relief package provides billions in urgently need funds to accelerate the free and equitable distribution of safe vaccines to Americans.
  • $20 billion for purchase of vaccines that will make the vaccine available at no charge for anyone who needs it
  • $8 billion for vaccine distribution
  • $20 billion to assist states with testing
  • $20 billion distribution from existing provider relief fund
•  Ends surprise billing: The package includes bipartisan, bicameral legislation that will end surprise billing for emergency and scheduled care.

Personal Financial Support to Americans

• Direct payment checks: A new round of direct payments worth up to $600 per adult and child, also ensuring that mixed-status families receive payments.
• Federal unemployment insurance benefits will be extended for 10 weeks through mid-March, with each week supplemented by a $300 payment, like the extra $600 supplement that expired at the end of July.
  • Provide unemployed individuals an additional $300 per week for 10 weeks from December 26, 2020-March 14, 2021
  • Extends and phases-out PUA, which is a temporary federal program covering self-employed and gig workers, to March 14 (after which no new applicants) through April 5, 2021
• Supports paid sick leave: The agreement provides a tax credit to support employers offering paid sick leave, based on the Families First framework.
• Rental assistance: The measure contains $25 billion for emergency rental assistance, and it extends the CARES Act’s eviction moratorium until Jan. 31, 2021.
• Strengthened Earned Income Tax Credit & Child Tax Credit: The agreement helps ensure that families who faced unemployment or reduced wages during the pandemic can receive a strong tax credit based on their 2019 income, preserving these vital income supports for vulnerable families.

Miscellaneous

• Strengthens the Low-Income Housing Tax Credit: The package enhances the LIHTC to help increase affordable housing construction and provide greater certainty to new and ongoing affordable housing projects.
• Historic expansion of Pell Grants: The package includes the largest expansion of Pell Grant recipients in over a decade, reaching 500,000 new recipients and ensuring more than 1.5 million students will now receive the maximum benefit.
• Broadband access: The agreement invests $7 billion to increase access to broadband, including a new Emergency Broadband Benefit to help millions of students, families and unemployed workers afford the broadband they need during the pandemic.
• WRDA: The agreement includes the bipartisan Water Resources Development Act of 2020, creating good-paying jobs strengthening and improving the vital water infrastructure that Americans rely on while unlocking the Harbor Maintenance Trust Fund.

Additionally, the time between release of the text and passage will be swift, TIA Government Affairs will prioritize issues germane to its membership. The Congress will vote this week on the measure and put the bill on the President’s desk by Christmas. Please see the full text of the omnibus spending bill and the COVID-19 economic relief bill which is combined into one piece of legislation that you can read here.

If you have any questions on this new COVID-19 economic relief bill, please do not hesitate to contact Advocacy@tianet.org.