Congress has overwhelmingly passed a $900 billion coronavirus relief package that will help franchises and other small businesses weather the continuing – and worsening – pandemic.
The Senate voted 92-6 late Monday night, and the house passed the legislation 359-53 earlier on Monday evening.
In addition to small-business aid, the mammoth 5,593-page law will send $600 per person for taxpayers earning $75,000 a year or less (or a $150,000 annual cap per couple), with direct-deposit payments starting next week, according to the Treasury Department. The new spending package also allots $300 per week, for 11 weeks, to unemployed workers who have exhausted their state’s jobless benefits. In addition, it provides rent assistance and eviction protection, boosts food stamps by 15%, and will help with COVID-19 testing, tracing and vaccine deliveries. Read more details on these measures in the bill here.
For several months the International Franchise Association (IFA) and its members had pushed for a second federal coronavirus aid package. Members of the IFA’s Franchise Action Network sent more than 100,000 letters to senators and congressional representatives since July and also rallied support on social media, via editorials, with ads, and via telephone.
The IFA released a statement hailing the new legislation as “much-needed help for America’s franchise small businesses and their employees. The proposal makes additional funding available for small businesses in the hugely successful Paycheck Protection Program, while ensuring tax deductibility of PPP expenses and streamlining forgiveness for some businesses – all hugely important for franchises struggling to stay afloat.” Read the IFA’s full statement here.
Here’s an overview of some provisions especially important to franchisees and small-business owners:
- The new legislation offers $284 billion for PPP loans for businesses with 300 or fewer employees that have sustained a 25 percent revenue loss in any quarter of 2020. Loans max out at $2 million per corporate entity.
- More expenses related to the coronavirus pandemic can be forgiven. For instance: software, cloud computing, personal protective equipment (PPE), plus other human resources and accounting needs. Property damage caused by public disturbances in 2020 that are not covered by insurance also can be forgiven.
- Business owners who borrowed less than $150,000 have a simplified loan forgiveness application, a one-page certification that requires the borrower to list the loan amount, the number of employees retained, and the estimated loan amount spent on payroll costs.
- The CARES Act, which is the coronavirus relief package that Congress passed last spring, allowed the SBA to cover principal and interest payments for new and existing SBA 7(a) and 504 loans. This new legislation extends those payments through March 31, 2021.
- The SBA’s 7(a) lending program has enhancements that include an increase to 90% loan guarantees for the 7(a) program and fee waivers.
- The new legislation extends and expands the CARES Act employee retention tax credit (ERTC) to June 30, 2021. It lifts the credit rate from 50% to 70% of qualified wages; it expands eligibility for the credit by reducing the required year-over-year gross receipts decline from 50% to 20%; it allows employers to use previous-quarter gross receipts to determine eligibility; and it raises the limit on per-employee creditable wages from $10,000 for the year to $10,000 for each quarter.
- It gives a break to borrowers who took out a PPP loan and an Economic Injury Disaster Loan ($10,000) advance grant. These borrowers no longer have to deduct the EIDL amount from their PPP loan when they apply for forgiveness.
The full text for the bill can be found here.
The small business section summary of the legislation can be found here.