By Mark E. Battersby / Published March 2021
In December 2020, Congress passed an additional round of COVID-19 relief. Despite containing a number of business-related provisions, the Consolidated Appropriations Act of 2021 largely made the news with general benefits such as the following:
The wide-sweeping bill contained quite a few provisions that impact employers, both in the private and public sectors, in 2021. Among the most significant provisions are the following measures:
The bill did not extend the mandates of Families First Coronavirus Response Act (FFCRA) created as part of last summer’s CARES Act. However, although FFCRA no longer requires certain employers to provide employees with paid sick leave or expanded family and medical leave for COVID-19, except on a voluntary basis, the new COVID relief bill allows employers another calendar quarter of paid leave tax credits.
The newly amended FFCRA rules allow employers to take a payroll tax credit for providing emergency paid “sick leave” and paid expanded “family medical leave” into the first quarter of 2021 to recover the costs of providing required FFCRA leave in 2020 and for “voluntarily” providing emergency leave and family medical emergency leave through March 31, 2021.
The new legislation included a number of provisions aimed at helping pressure cleaning businesses—and their owners—survive the pandemic, including the following:
The new legislation included approximately $325 billion in funding for the Small Business Administration (SBA) to assist small businesses that have been impacted by the COVID-19 pandemic. Included among the numerous small business funding opportunities are these provisions:
Of course, the big news is the renewal of the Paycheck Protection Program (PPP).
The new bill provides $284 billion to reopen and strengthen the PPP for both first-time and second-time borrowers. As with the original PPP, thanks to PPP2, small businesses can borrow money from private lenders without collateral, personal guarantees, or fees. These loans don’t have to be repaid to the extent they have been used to cover certain expenses.
Among the features of the restored PPP is a process for businesses to receive a second PPP loan if they have less than 300 employees and can show a 25 percent reduction in revenue in any 2020 quarter compared with the same quarter in 2019. Sole proprietors, independent contractors, and the self-employed are also eligible to apply.
In general, borrowers are eligible for PPP loan forgiveness if they apply at least 60 percent of the proceeds to payroll. Partial loan forgiveness may be available to those failing to meet this threshold. Borrowers may spend up to 40 percent on other qualified expenses during the covered periods.
In addition to rent, mortgage interest, and utilities, the list of eligible non-payroll expenses has been expanded to include worker protection and facility modification expenditures including PPE and operating costs such as software and cloud computing services.
The maximum loan amount is $2 million for “second draw” loans, down from the $10 million maximum that applied under the original CARES Act. Most borrowers can qualify for a loan of up to 2 1/2 times their average monthly payroll costs, and PPP loans that aren’t forgiven are subject to an interest rate of one percent.
Reversing an earlier ruling by the IRS, business expenses paid with PPP funding would be tax deductible. Beware, however—many states may not go along with allowing these deductions together with loan forgiveness, with the result of an unexpected state tax bill.
Unfortunately, the bill rescinded amounts formerly appropriated under the CARES Act for direct loans by the Treasury and emergency lending by the Federal Reserve. That means the end of several lending programs, including the Main Street Loans.
Somewhat more targeted, the new bill contains the following provisions in several areas:
The $900 billion in coronavirus relief bill brings the total amount of government spending in response to the pandemic to more than $3.3 trillion, a staggering amount that highlights the unprecedented shutdown of the economy and the resulting fallout. Best of all, many of the benefits aimed at pressure cleaning contractors and businesses will stick around long after the pandemic is over.
The controversial $1.9 trillion American Rescue Plan, on the other hand, contains a third round of stimulus checks, funding for vaccine distributions, and more. However, beyond proposing a new $15 billion grant program for small business owners, separate from the existing PPP, and a push toward a universal $15 per hour minimum wage, there appears little that will impact on a pressure cleaning business.
Not so surprisingly, whether attempting to reap the maximum amount of funding, benefits, or tax breaks from last December’s COVID Relief bill, or new executive orders or Congressional legislation, professional assistance will be invaluable for every contractor and business owner.