Federal COVID-19 Recovery Package 2.0

The second COVID-19 recovery package was signed into law December 27, 2020. The package includes a second round of funding for both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Advance Grant. The new law also makes a number of business-friendly tax changes to both programs, as well as extending some of the tax credits from the first recovery package.  

Here are the main takeaways from the COVID-19 Recovery 2.0 legislation that small business owners should know. 

Economic Impact Payment Check 2.0 

  • $600 for an individual ($1,200 for couples) plus an extra $600 per dependent  
  • Reduced for individuals earning more than $75k and phased out entirely at $100k (adjusted gross income) 

PPP 2.0 

  • Re-opened through March 31, 2021 with an additional $284B in funding 
  • Businesses are eligible to receive a second forgivable loan if they: (1) employ 300 employees or less; (2) have used or will use the full amount of their first PPP; (3) demonstrate at least a 25% reduction in gross receipts in any quarter in 2020 compared to the same quarter in 2019
  • Small business owners can also apply for an initial PPP loan 
  • Simplifies the forgiveness application for loans under $150k 
  • Allows borrowers to specify a covered period between 8-24 weeks for PPP 2.0 loans 
  • Repeals the requirement of deducting an EIDL Advance Grant from PPP loan forgiveness amount 
  • Expands eligible expenses to include costs for modified business operations, supplier costs, and costs associated with complying with health and safety guidelines 
  • Businesses in the restaurant and hospitality industries are eligible to receive loans of 3.5x average monthly payroll, rather than 2.5x 

EIDL Advance Grant 2.0 

  • Adds another $20B for EIDL Advance Grants 
  • Eligible small businesses are able to receive additional funding if their first EIDL Advance Grant was under $10K if they: (1) employ 300 employees or less; (2) demonstrate at least 30% reduction in gross receipts in any 8-week period between March 2, 2020 and December 31, 2021; (3) are located in a low-income community, as defined for the New Markets Tax Credit 

Tax Provisions  

  • Reverses IRS ruling to allow tax deductions for PPP forgiven expenses and clarifies that PPP loan forgiveness is not taxable income 
  • Clarifies that EIDL Advance Grants are not included in taxable income 
  • Extends FFCRA tax credits through March 31, 2021 
  • Extends the Employee Retention Tax Credit through July 31, 2021 and expands the credit