Amongst its quite a few reduction and stimulus provisions, the recently-enacted 2021 Consolidated Appropriations Act (the “Act”) authorizes as much as a further $284.5 billion for Fee Safety Program (“PPP”) loans and a brand new leisure business grant program for “shuttered venue” operators. Right here’s a abstract of those provisions.
The PPP started in April 2020 with $349 billion in funding. After the preliminary funding was exhausted in lower than two weeks, a further $310 billion was licensed, bringing complete PPP funding to $659 billion. The Paycheck Safety Program Flexibility Act of 2020, signed in June, 2020, made substantial modifications to the PPP, however the authorization for brand new PPP loans lapsed final August.
Along with authorizing further PPP mortgage funding, the Act modifications the prevailing PPP in a lot of respects, together with the next:
- Permits eligible PPP debtors to obtain a second PPP mortgage (a “second draw” mortgage) if they’ve absolutely used, or will use, their preliminary PPP mortgage earlier than the date of receipt of the second draw mortgage;
- Extends till March 31, 2021 the interval throughout which debtors might obtain preliminary and second draw PPP loans;
- Considerably expands the varieties of coated bills eligible for forgiveness to incorporate (along with payroll prices, sure mortgage prices, hire, and utility bills):
- sure property harm prices, together with prices arising from property harm as a result of “public disturbances” throughout 2020 not coated by insurance coverage;
- sure employee safety bills, together with prices incurred to adjust to COVID-19-related employment security necessities imposed by federal, state and native governments;
- sure working prices, together with funds for “any enterprise software program or cloud computing service that facilitates enterprise operations…”;
- sure provider prices, together with bills for provides “important to the operations of the entity” and made pursuant to agreements regarding perishable items or in any other case entered into earlier than the mortgage forgiveness coated interval;
- Expands borrower eligibility to incorporate sure 501(c)(6) organizations, vacation spot advertising and marketing organizations and sure state schools and universities;
- Simplifies the forgiveness utility for loans not exceeding $150,000;
- Expressly prohibits participation by publicly-listed firms; and
- Establishes particular procedures for debtors which can be in chapter, permitting debtors in possession or trustees to acquire PPP loans if permitted by the chapter courtroom.
For second draw loans, not all debtors who have been eligible for preliminary PPP loans can be eligible, as eligibility standards have been revised. For instance, debtors in search of second draw loans might not have greater than 300 full-time and part-time workers, a discount from the 500-employee restrict relevant to preliminary PPP loans, and are required to point out a discount of no less than 25% in gross receipts in any given quarter of 2020 (as in comparison with the corresponding 2019 quarter).
The Act additionally clarifies that (i) forgiven PPP loans won’t be included in taxable revenue, (ii) deductions are permitted for bills paid with PPP loans which were forgiven, and (iii) within the case of debtors which can be partnerships or S companies, PPP mortgage forgiveness won’t scale back the skin tax foundation of a companion’s or shareholder’s curiosity or shares in such entity.
Leisure Trade Reduction: Shuttered Venue Operator Grant Program
The Act additionally creates a brand new “Shuttered Venue Operator Grant” program. This program offers for $15 billion in grants to sure stay occasion operators and promoters, expertise representatives, performing arts teams, theatrical producers, film theaters, nonprofit museums, botanic gardens, zoos and historic properties. These grants are supposed to cowl prices incurred between March 1, 2020 via December 31, 2020, together with eligible PPP bills, promoting, state and native taxes, upkeep bills and administrative prices, sure mortgage and debt funds and funds to impartial contractors. As a way to be eligible, a grant recipient should, along with satisfying different standards, have been absolutely operational as of February 29, 2020, reveal that it suffered a discount of no less than 25% in income throughout any quarter in 2020 as in comparison with the corresponding 2019 quarter and be open or have an intention to reopen as of the date of the grant. Eligible entities can not have operated in a couple of nation or greater than 10 states or employed greater than 500 workers as of February 29, 2020.