Congress passed an additional Covid relief package Dec. 21, including a $900 billion measure and Paycheck Protection Program (PPP) policy changes that assist U.S. small businesses.
The 5,600-page combined government funding and Covid relief bill will offer more than $284 billion for forgivable first and second PPP loans. Added to the $134 billion left over from initial funding in the Coronavirus Aid, Relief and Economic Security (CARES) Act, $418 billion will be available to PPP recipients.
“This is a lifeline for millions of Americans,” RVIA stated.
The bill provided clarification on the loans’ covered expenses tax deductibility, stating deductions, tax at tribute and basis increases will not be considered in gross income, meaning the loans are not taxable.
“This PPP program was used extensively by RV dealerships,” RVDA President Phil Ingrassia said. “This is very good news, so that dealers don’t get stuck with a tax bill.”
RVDA worked with business groups in a broad-based effort to support the policy changes, he added.
The IRS had argued that allowing the deductibility of covered expenses would amount to a double deduction. However, many businesses made covered expenses because they could be paid for with a PPP loan, arguing that they should not be taxed on expenditures they otherwise would not have made.
“Certainly, many dealers took advantage of the PPP program to help steady the ship and set the stage for keeping staff employed and people on payroll so they’re in a position to serve people in a dealership,” Ingrassia said.
The bill passed with strong bipartisan support, evidenced by a 92-6 vote in the Senate and 359-93 in the House. President Donald Trump is expected to sign it immediately, RVIA stated. Once the bill is signed, the Small Business Administration (SBA) has 10 days to write new PPP rules.
PPP reauthorization will accept loan applications through March 31, 2021.
The first PPP funding round totaled $349 billion and was spent in 13 days, before Congress approved an additional $310 billion.
This time, Congress created the potential to access a second PPP loan. The second draw is available to non-publicly traded business with fewer than 300 employees who can provide evidence of a 25 percent revenue loss in 2020’s first, second or third quarter relative to the same quarter last year. Businesses must have used, or plan to use, the first PPP loan’s full amount before receiving a second loan.
The bill includes streamlined forgiveness procedures for loans up to $150,000, and with more documentation, loans between $150,000 and $2 million, which is the maximum loan amount.
The bill included other relief and stimulus funding.
Congress will provide an additional Economic Impact Payment round of $600 for individuals making up to $75,000 per year and $1,200 for couples making up to $150,000 per year.
The bill includes $20 billion allocated to new Economic Injury Disaster Loan (EIDL) Grants for businesses in low-income communities, $3.5 billion for continued SBA debt relief payments and $2 billion to SBA lending enhancements.
“The bill also importantly extends and expands the refundable Employee Retention Tax Credit (ERTC), which was established in the CARES Act,” RVDA stated. “The extension of this tax credit will help keep additional U.S. workers on payroll and more small businesses and nonprofits across the country afloat.”
RVIA highlighted top numbers in the Covid relief bill:
- Direct economic relief for workers and families: $286 billion ($120 billion in Unemployment Insurance and $166 in Economic Impact Payments)
- Small business help (including PPP): $325 billion
- Support for community development financial institutions and minority depository institutions: $25 billion
- Transportation: $45 billion
- Vaccines, testing and tracing, community health and healthcare provider support: $45 billion
- Broadband services: $7 billion
- Schools: $82 billion
- Rental assistance: $25 billion
RVIA said its government affairs team will provide a detailed RV industry impact analysis in the coming weeks.