On March 27, 2020, the US Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in response to the COVID-19 outbreak in the US. The CARES Act provided economic relief to individuals and businesses facing economic hardship due to the pandemic. On December 27, 2020, the Consolidated Appropriations Act, 2021 (CAA-21) was passed to provide $900 billion in a second round of COVID-related stimulus relief. On March 11, 2021, the American Rescue Plan Act of 2021 (ARPA) provided a third round of stimulus by extending and enhancing programs created under the CARES Act, and CAA-21, and by creating new programs. These programs provide financing, grants, and other financial assistance across a broad swath of the economy, including small businesses, restaurants, and shuttered venue operators. This page highlights key provisions of the CARES Act and CAA 2021 most relevant to small businesses seeking emergency financial relief.
Designed to encourage small businesses to retain employees through the COVID-19 crisis.
Debt Forgiveness: Up to 100% debt forgiveness if both:
Not more than 40% of the forgiven amount may be for non-payroll costs (for example, mortgage interest, rent, and utilities; CAA-21 also added operational expenses, certain property damage costs, supplier costs, and worker protection expenses).
Loan forgiveness will be reduced if the business:
Any loan amounts forgiven under the PPP will not be treated as taxable income (meaning, the amount will not be considered taxable cancellation of indebtedness income).
To avoid a reduction in the loan forgiveness amount, businesses have until December 31, 2020 to restore their full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. For loans made on or after December 27, 2020, businesses have until the last day of the covered period to restore their full-time employment and salary levels.
Businesses with 500 or fewer employees that were operational on February 15, 2020. Businesses include sole proprietors, independent contractors, non-profits, and certain self-employed individuals. Loan eligibility is not based on the ability to repay. Borrowers must make a good faith showing that the current economic uncertainty makes their loan request necessary to support their ongoing business operations.
Businesses include sole proprietors, independent contractors, non-profits, and certain self-employed individuals.
Loan eligibility is not based on the ability to repay.
Borrowers must make a good faith showing that the current economic uncertainty makes their loan request necessary to support their ongoing business operations.
If receiving a PPP loan, qualified wages counted toward PPP loan forgiveness are ineligible for Employee Retention Credit. The business cannot use PPP funds for same expenses as other SBA loans. Economic Injury Disaster Loan (EIDL) and Emergency Economic Injury Grant (EEIG) or EIDL Advance recipients may apply for and take out a PPP loan as long as there is no duplication in the uses of funds. Under CAA-21, the proceeds from an EIDL Advance will not be deducted from the loan forgiveness amount on the PPP loan.
PPP loans are made through an SBA-approved lender. The PPP Extension Act of 2021 extends the PPP through May 31, 2021.