What You Should Know About the Consolidated Appropriations Act of 2021

Consolidated Appropriations Act of 2021
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We’re 13 days into 2021 and a lot has already happened. Chances are you haven’t processed the end of 2020. Congress recently pass the Consolidated Appropriations Act of 2021, the CAA is long, really long at over 5,500. We have put together some of the highlights that you need to know when it comes to business, in particular what’s new with the PPP for 2021.

Here are some of the takeaways

  • The definition of payroll cost officially includes group life, disability, vision, and dental insurance. The change to the definition is retroactive if you have not applied for forgiveness for PPP1.
  • There is a one-page loan forgiveness application for loans valued at $150,000 or less.
  • You may request a modification to the original PPP (PPP1) if you did not use the maximum amount of the loan.
  • The following expenses can be forgiven:

    • Payroll Cost
    • Covered mortgage, rent and utility payments
    • Covered operation expenditures
      • Includes software and cloud computing expenses related to HR and accounting.
    • Coverage property damage cost
      • Costs related to property damage due to public disturbances that occurred during 2020, not covered by insurance.
    • Covered supplier cost
      • Payments to a supplier pursuant to a contract/purchase order in effect prior to take out the PPP; if the expenditures were essential to the recipients operations at the time the expenditure was made.
    • Covered worker protection expenses
      • Cost to pay for PPE and other investments that would make your business compliant with government guidelines related to COVID-19 from March 1, 2020 to the end of the national emergency declaration.
    • The expenses that can be forgiven are retroactive if you have not yet applied for forgiveness for the original PPP.
    • You still must spend 60% of the loan on payroll cost to be eligible for forgiveness.
    • The CAA recently clarified that  business expenses may be deducted even if paid for with a PPP loan that is forgiven & excluded from income.
  •  

To apply and receive the new PPP you must have maxed out the original PPP. You must now have fewer than 300 employees and be able to show a 25% decrease in gross receipts in one quarter of 2020 compared to 2019 or a 25% from 2020 compared to 2019.

The CAA as it relates to the Families First Coronavirus Response Act

  • The mandate to provide employees with paid sick and, paid family and medical leave for certain reasons related to COVID-10 has expired.
  • It is now voluntary.
    • You can still provide the leave mentioned in the Families First Coronavirus Response Act to employees. If you provide the leave from FFCRA you the employer will be eligible for tax credit through 3/3/2021.
    • If your employee previously used leave in 2020 they are not currently eligible to use it in 2021.

 

First PPP Draw Details

Second PPP Draw Details

PPP Loans FAQs

3508EZ PPP Loan Forgiveness Application

See Title III- Continuing the Paycheck Protection Program and other Small Business Support

H.R. 133-812

The above is not intended legal or financial/accounting advice. The summary is not complete and is subject change. For questions you should reach out to your banker/accountant or one of the entities responsible for the PPP, FFCRA, or CAA.

 

Copyright 2021

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