Paycheck Protection Program (PPP), round two...
The Consolidated Appropriations Act of 2021 has allocated an additional $284 billion to the Small Business Administration, allowing smaller businesses to a receive a second forgivable PPP loan up to $2 million. These newly allocated funds are limited to small businesses with 300 or fewer employees. The business also must have sustained a 25 percent loss of revenue in any 2020 calendar quarter compared to the corresponding 2019 calendar quarter.
Not unlike the loans previously provided under the PPP, these loans will be forgiven to the extent the funds are used for qualified expenses. The Consolidated Appropriations Act of 2021 expanded the forgivable expenses to include operations expenditures, property damage costs, supplier costs and investments in facility modifications and personal protective equipment. This is in addition to payroll costs, mortgage interest, rent, and utilities which were already covered under the program and applies to PPP loans previously received, but not yet forgiven. Most importantly, not only will the forgiven loans be excluded from taxable income, but all qualified expenses paid for with the loan proceeds will be deductible. Their deductibility was previously disallowed by the Internal Revenue Service in their administrative guidance; however, the Act confirms that Congress’ intent was to allow the double benefit when initially creating the program. Additionally, while the Act provides a simplified forgiveness application for those receiving $150,000 or less, a more rigorous substantiation process, including a nine-page questionnaire, is required for those who received $2 million or more in loan proceeds.
What’s in the New Coronavirus Relief Package?
As the coronavirus vaccine began to roll out, providing a light at the end of the COVID-19 tunnel, Congress passed a $900 billion relief package and government funding bill at the end of 2020, providing emergency relief to individuals and businesses by extending timeframes to several provisions from the earlier CARES Act. While the headline news was the $600 payment to individuals, there are many other provisions that you may be able to take advantage of.
Additional information can be found here.
- Big Jobless Claims Miss: The weekly initial jobless claims came in at 965,000 (versus the anticipated 780,000 Briefing.com consensus). This report is the highest since August 2020. The continuing claims are up to 5.3 million. Although this is another big miss in the labor market, the trends have been mostly negative for months. The recently passed stimulus (and the speed of disbursement) will help ease broader economic pain, but it seems clear that the labor market will remain severely impaired until vaccinations reach a critical mass. Leisure and hospitality workers continue to bear the brunt of the pain.
- Biden Unveils Economic Plan: President-elect Biden outlined a $1.9 trillion plan to help Americans weather the pandemic shock and provides more money for testing and vaccine distribution. Biden will push for bipartisan agreement, though the press noted Democrats could resort to using the budget reconciliation path to pass some provisions. The plan includes:
- $1,400 additional direct payments to most households
- A $400-a-week unemployment insurance boost through September
- Expands paid leave
- Increases in the child tax credit
- Provides funds for vaccine distribution
- Provides aid to state and local governments.
- Fed Notes: Fed Chair Powell stated that the time to raise rates isn’t soon, and that the Fed won't hike unless it sees troubling inflation and imbalances. Powell also said that the Fed will not tie itself to a particular formula when inflation rises to the target. Powell's in line with other Fed officials, who have reiterated fairly dovish stances over the past few days. The street broadly expects few policy changes this year; some noted higher inflation could push up timing of tapering, though Powell largely put a lid on that discussion.
- Dr. Omar Atiq, an oncologist who founded the Arkansas Cancer Clinic in 1991, sent out notices to patients earlier this week that any outstanding debt would no longer need to be paid. The Arkansas Cancer Clinic has outstanding patient bills totaling nearly $650,000, said Atiq, also a professor at the UAMS College of Medicine and oncologist at the UAMS William P. Rockefeller Cancer Institute. "We thought there was not a better time to do this than during a pandemic that has decimated homes, people's lives and businesses and all sorts of stuff," Atiq said. "We just thought we could do it, and we wanted to, so we went ahead and did it."
- Although it is hard to believe, there were many new species discovered in 2021, including several snakes, frogs, insects, and even new primate species. They ranged from what is believed to be the longest animal ever recorded (the mysterious coiled siphonophore measuring 46 meters (150 feet) in length) to the tiny lilliputian frog (measuring around 10 millimeters). More information on the new species can be found here.