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Federal COVID-19 relief package, signed March 11, funds small-business loans, grants, vaccine production

Package also extends Employee Retention and FFCRA tax credits, unemployment benefits

March 17, 2021 16866

Quick Summary:

The package allocates an additional $7.25 billion for the Paycheck Protection Program, and $15 billion in targeted EIDL advances to help business owners who applied for relief in 2020 but did not receive the maximum $10,000 grant. The plan also extends through Sept. 30 the FFCRA payroll tax credit.

The $1.9 trillion COVID-19 relief bill signed March 11 by President Joe Biden provides billions of dollars in relief for individuals, families and small businesses through forgivable low-interest loans, tax credits, emergency grants, extended unemployment benefits and other assistance, including direct stimulus payments to eligible adults and their dependents.

The bill, known as the American Rescue Plan Act of 2021, also dedicates billions of dollars to a national vaccination plan that aims to get as many people in the U.S. vaccinated against COVID-19 as quickly as possible, including by increasing the number of eligible vaccinators. The targeted funding will open community vaccination sites across the nation, address continued shortages of personal protective equipment and improve testing and contact tracing, among other investments. 

States will also receive federal funds to assist their economic recovery. California is slated to receive some $42 billion to protect renters and homeowners, help frontline health care and critical workers keep their jobs and ensure K-12 schools can reopen safely.

Additional $7.25B in PPP funding

The act allocates an additional $7.25 billion for the Paycheck Protection Program, which offers forgivable loans to small businesses that spend at least 60% of the funds on qualifying payroll costs with the goal of maintaining the workforce.

March 31 is the last day to apply for a first- or second-draw PPP loan, meaning certain businesses that previously received a PPP loan are eligible to apply for a second loan, as a recent CDA article explains.  

Applicants can find loan details and apply through the Small Business Administration website.

Targeted funds for disaster loan advances

Low-interest (3.75%) economic injury and disaster loans are available to businesses that are experiencing a temporary loss of revenue due to COVID-19, and the American Rescue Plan provides an additional $15 billion in targeted loan advances to help business owners who applied for relief in 2020 but did not receive the maximum $10,000 grant ($1,000 per employee).

Business owners are not required to repay the advance. Interest does accrue on the loans; however, the SBA on Monday announced that it deferred all EIDL and other disaster loan payments until 2022. The date of the loan determines the first repayment date.

As with the PPP, business owners apply for the EIDL through the SBA website. The SBA states it will contact EIDL applicants who received partial EIDL advances with instructions for determining eligibility. 

CDA’s COVID-19 2021 SBA Loans and Grants flowchart covers terms and eligibility details on both the PPP and EIDL.

Extension of FFCRA tax credit, Employee Retention Credit

The federal relief plan extends through Sept. 30 the payroll tax credit created by the Families First Coronavirus Response Act. The credit is intended to help employers defray the costs of any emergency paid sick leave and emergency paid family and medical leave that employers were required to provide to employees impacted by the pandemic under the FFCRA in 2020 and who voluntarily offer the leave in 2021.

As of Jan. 1, employers are no longer mandated to provide the emergency leave under the FFCRA, but they may choose to voluntarily provide it through March 31. Those employers who are voluntarily providing the emergency leave can continue to receive tax credits for qualifying wages paid to employees between April 1 and Sept. 30.

The California Legislature is currently considering a bill that would require employers of 26 or more to offer paid sick leave.

Also, the Employee Retention Credit, which was created by the Cares Act and expired Dec. 31, 2020, was extended through Dec. 31, 2021.

The credit provides relief to businesses that keep their employees on the payroll during the pandemic and allows employers to claim a refundable tax credit against the employer share of Social Security tax equal to 70% of the qualified wages they pay to employees between Dec. 31, 2020, and June 30, 2021.

A CDA article published in late January covers eligibility and other details. 

Unemployment benefits extended through Sept. 6; new income tax exemption

The Federal Pandemic Unemployment Compensation benefits, which were set to expire March 14, will continue through Sept. 6 with the current weekly benefit of $300. 

Households that make less than $150,000 are also available for a new federal income tax exemption of up to $10,200 on any federal unemployment benefits received in 2020.

The Pandemic Unemployment Assistance program and the Pandemic Emergency Unemployment Compensation program, which would have expired March 14 under the Cares Act, will also continue through Sept. 6. Those plans provide benefits to certain self-employed and pandemic-affected individuals who do not qualify for regular state benefits or those who have exhausted their normal unemployment benefits.

Support for California’s economic recovery

California will receive about $42 billion in federal funds to help with its economic recovery, including safely reopening of K-12 schools and keeping frontline health care workers in their jobs. Emergency rental and utility assistance will help to stabilize renters during the pandemic and help rental property owners cover their costs.

The new funds should also reach homeowners who need direct assistance with mortgage payments, utilities, property taxes and related housing costs.

Vaccine and PPE production, COVID-19 testing  

Funding the Defense Production Act will close the gap in U.S. manufacturing to meet public health needs with $10 billion in funding dedicated to increasing domestic production of the COVID-19 vaccine, critical personal protective equipment and rapid COVID-19 tests. Another $47.8 billion will bolster testing and contact tracing through a newly created national strategy. 

President Biden’s announcement last week that all adults in the U.S. will be eligible for COVID-19 vaccines by May 1 follows the administration’s commitment to ramp up vaccine production and increase the number of vaccination clinics and eligible vaccinators nationwide. The CDA article published March 11 provides the latest on COVID-19 vaccine administration in California, including new opportunities for dentists to vaccinate. 

CDA will continue to monitor how the funds in the federal package will be allocated at the state level and will share additional details with members as they become available.