Newburg Staff Writers-March 11, 2021 (6:00 AM)
Congress approved the expansive $1.9 trillion relief package on Wednesday, authorizing new federal spending, covering such areas as school and college aid, vaccine distribution funding, as well as a variety of areas assisting both businesses and individuals. Some of the key highlights for the newly passed plan are as follows:
Restaurant Revitalization Fund
- SBA administered $28.6 billion program:
- The grants are designed to help establishments cover revenue losses related to the pandemic from February 15, 2020 through the end of 2021.
- The plan would provide up to $5 million in grants (not loans) for individual restaurants, bars, caterers, food trucks, breweries and tasting rooms or up to $10 million for restaurant groups.
- Eligibility For All Restaurants & Bars
- Grant eligibility is calculated by “pandemic-related revenue loss” or the difference between a particular restaurant’s 2020 sales and their 2019 revenue.
- Restaurants that opened in 2019 and 2020 are also eligible.
- Additionally, one-fifth of the restaurant relief money pot would reserve $5 billion of grants for restaurants with revenues of less than $500.000 in 2019, which theoretically is targeted towards small, independently-owned businesses.
- Grant Amount
- If the business has fewer than 20 locations, it can get a grant up to $5 million per location, up to $10 million in total.
- Grant eligibility is calculated by “pandemic-related revenue loss” or the difference between a particular restaurant’s 2020 sales and their 2019 revenue.
- Additionally, one-fifth of the restaurant relief money pot would reserve $5 billion of grants for restaurants with revenues of less than $500.000 in 2019, which theoretically is targeted towards small, independently-owned businesses.
- Those businesses receiving PPP loans after December 27, 2020 would need to subtract these approved funds from the grant total.
- Covered expenses
- Grants can cover the funds for payroll, employee benefits, and paid sick leave, as well as mortgage, rent, utility bills and maintenance; construction of outdoor seating, masks, cleaning supplies, food costs, and to pay off debts to suppliers.
- Restaurants who receive grants can use their federal aid money for expenses dating back to the start of the pandemic (February 15th, 2020) all the way through December 31st, 2021.
- Application Process
- To be determined – the Small Business Administration will be working on guidance for applicants and the actual application once the bill is signed by the President.
Economic Injury Disaster Loan (EIDL)
- Additional payments set aside for eligible entities totaling $15 billion
- $10 billion to covered entities – recipients with 300 or fewer employees and with economic losses of at least 30% over eight weeks with a like period prior to the pandemic that did not receive their full advance payments under the December COVID-19 relief package.
- $5 billion to provide new supplemental payments of $5,000 to businesses with 10 or fewer employees that had economic losses of more than 50% during a covered period.
- The act provides that targeted Economic Injury Disaster Loan (EIDL) grants received from the U.S. Small Business Administration (SBA) are not included in gross income and that this exclusion from gross income will not result in a denial of a deduction, reduction of tax attributes, or denial of basis increase. Similar treatment is afforded SBA restaurant revitalization grants mentioned above.
Paycheck Protection Program (PPP)
- Additional $50 billion infused to the program with an emphasis on getting money more expediently to the smallest businesses.
Employee Retention Credit (ERTC)
- This program has been extended through the end of 2021. Previously the credit was only eligible for the first 2 quarters of 2021. The credit is also now allowed against Medicare tax.
Recovery Rebates/Stimulus Checks
- The act creates a new round of economic impact payments to be sent to qualifying individuals. The same as last year’s two rounds of stimulus payments, the economic impact payments are set up as advance payments of a recovery rebate credit. The act provides individuals with a $1,400 recovery rebate credit ($2,800 for married taxpayers filing jointly) plus $1,400 for each dependent for 2021, including college students and qualifying relatives who are claimed as dependents. As with last year’s economic impact payments, the IRS will send out the advance payments of the credit.
- For single taxpayers, the credit and corresponding payment will begin to phase out at an adjusted gross income (AGI) of $75,000, and the credit will be completely phased out for single taxpayers with an AGI over $80,000. For married taxpayers who file jointly, the phaseout will begin at an AGI of $150,000 and end at AGI of $160,000. And for heads of household, the phaseout will begin at an AGI of $112,500 and be complete at AGI of $120,000.
State Small Business Credit Initiatives
- $10 billion infusion into the State Small Business Credit Initiative. This program provides funding for state run small business financing programs supporting owned by socially and economically disadvantaged individuals.
Unemployment Payments
- $300 weekly federal boost to unemployment benefits through September 6th. Also extends two key pandemic jobless benefit programs through the same period.
- The bill also makes the first $10,200 of unemployment income tax free in 2020 for households with annual income under $150,000.
Child Tax Credit
- For 2021 the credit will increase to as much as $3,000 per child ($3,600 for ages 5 and under). The age limit for qualifying children also rises to 17, from 16. The bill makes the credit fully refundable, even if your tax bill is reduced to zero. 50% of this credit can be advanced to households over the next six months commencing July. More details are forthcoming. Married couples who have modified adjusted gross income of 150,000 or lower (or heads of household up to $112,500 and single filers up to $75,000) receive the full value of the new benefit.
Dependent Care Benefits
- The bill also significantly enhances the dependent care tax credit for children under age 13 making it now refundable and worth up to $4,000 for one qualifying individual or $8,000 for two or more.
Rent, Utility and Mortgage Assistance
- The bill earmarks roughly $20 billion to states for assistance with low-income households to cover back rent, rent assistance and utility bills.
Please note that these are only some of the highlights within the new bill. We will continue to keep you apprised of additional details once the President signs into law.