The $900 billion package includes several changes to the Paycheck Protection Program created in March under the CARES Act.

Earlier this week, Congress agreed on a $900 billion coronavirus relief package, adding it to a $1.4 trillion omnibus spending bill that would fund the federal government through September 30, 2021. The package passed both the House and Senate. President Donald Trump has said that he will quickly sign the bill into law once it reaches his desk.

The federal relief package includes several changes to the Paycheck Protection Program created in March under the CARES Act, including:

Clarification of Tax Treatment of Paycheck Protection Program (PPP) Loans: The bill specifies that forgiven PPP loans will not be included in taxable income. It also clarifies that deductions are allowed for expenses paid with proceeds of a forgiven PPP loan, effective as of the date of enactment of the CARES Act (March 27th, 2020) and applicable to subsequent PPP loans. This same tax treatment also applies to Economic Injury Disaster Loan (EIDL) grants and certain loans and loan repayment assistance.

The bill includes $284 billion for the PPP program and extends PPP through March 31, 2021. Changes to PPP include:

  • Provides for a second PPP forgivable loan for the hardest-hit small businesses and non-profits with 300 or fewer employees who can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019;
  • Adds PPE expenses, costs associated with outdoor dining, and supplier costs as eligible and forgivable expenses (more on that below);
  • Simplifies the forgiveness process for loans of $150,000 and less;
  • Repeals the requirement of deducting an EIDL Advance from the PPP forgiveness amount;
  • Creates a dedicated $15 billion set-aside for lending through community financial institutions, including community development financial institutions and minority depository institutions to increase access for minority-owned and other underserved small businesses and nonprofits;
  • Creates a set-aside for small businesses with 10 or fewer employees and for small businesses located in distressed areas.

The following expenses are also allowable and forgivable through use of Paycheck Protection Program funds:

  • Covered operations expenditures. Payment for any software, cloud computing, and other human resources and accounting needs;
  • Covered property damage costs. Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance;
  • Covered supplier costs. Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan;
  • Covered worker protection expenditure. Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.

The bill also would allow loans made under PPP before, on, or after the enactment of this act to be eligible to utilize the expanded forgivable expenses except for borrowers who have already had their loans forgiven.  For additional details, read more.Â