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December 28, 2020

COVID-19 UPDATE: $900 Billion Covid-19 Relief Package Becomes Law

We hope that everyone had a relaxing and enjoyable holiday, and we want to wish you a Happy New Year. As you know, throughout the course of the year we have provided various COVID updates as circumstances warranted. It has been some time since our last update as Congress and the Administration went back and forth on various forms of an amendment to the CARES Act. We are pleased to report that yesterday the President signed into law the $900 billion supplemental Covid-19 relief legislation. The official version of the legislation can be found HERE. A comprehensive summary of the legislation released by the National Conference of State legislatures can be found HERE.

Below are some of the key highlights of the legislation.

Paycheck Protection Program

Additional Paycheck Protection Program Funding
The new Covid-19 relief authorizes an additional $284.45 billion to the SBA’s Paycheck Protection Program (“PPP”) and creates a more simplified and streamlined application process for PPP loans under $150,000. The legislation does allow some smaller and harder-hit businesses to take out a second PPP loan, in a maximum amount of $2 million. Eligibility requirements for a second PPP draw include that a business must:

  • Employ not more than 300 employees;
  • Have used or will use the full amount of their first PPP loan; and
  • Demonstrate at least a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter. Applications submitted on or after January 1, 2021 are eligible to utilize the gross receipts from the fourth quarter of 2020.

$15 billion of the additional PPP funding has been allocated to live venues. While no amount of the additional PPP funding has been allocated exclusively to minority business enterprises (“MBE”), the legislation does allocate $15 billion of PPP loans to community and minority lenders for distribution. This was done with the goal of making the additional PPP funds more readily accessible to MBE firms; MBE firm PPP loan accessibility was identified as a major issue with the first round of PPP funding.

Expansion of PPP Eligible Expenses
The legislation also expands PPP eligible expenses. In addition to payroll, rent, mortgage interest, and utility expenses, the new legislation has categorized the following as forgivable expenses under PPP:

  • Covered operations expenditures: Payment for any software, cloud computing, and other human resources and accounting needs. Covered property damage costs: Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.
  • Covered supplier costs: Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan.
  • Covered worker protection expenditure: Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.

Tax Deductibility of PPP Expenses
There had been debate between the Internal Revenue Service and the business community about whether business expenses paid for using PPP loan proceeds should be tax deductible. Under the new legislation, Congress has promulgated that such expenses are tax deductible. In effect, a business can have the PPP loan forgiven and also have business expenses paid for with the PPP loan proceeds deducted from its corporate taxes. We advise any business interested in taking advantage of this aspect of the legislation to further consult with their accountant.

Extension of Paid Sick Leave

The legislation extends the refundable payroll tax credits for paid sick and family leave, enacted in the Families First Coronavirus Response Act (“FFCRA”), through the end of March 2021. It also modifies the tax credits so that they apply as if the corresponding employer mandates were extended through the end of March 2021. This provision is effective as if included in FFCRA.


The legislation authorizes $2 billion for airports to prevent, prepare for, and respond to coronavirus:

  • Not less than $1.75 billion will be made available to primary airports and certain cargo airports for costs related to operations, personnel, cleaning, sanitization, janitorial services, combating the spread of pathogens at the airport, and debt service payments.
    • “Primary airport” means a commercial service airport that has more than 10,000 passenger boardings each year.
  • Not less than $45 million will be made available to general aviation and commercial service airports that are not primary airports for costs related to operations, personnel, cleaning, sanitization, janitorial services, combating the spread of pathogens at the airport, and debt service payments.
  • Not less than $5 million will be made available to sponsors of non-primary airports, divided equally, to cover lawful expenses to support FAA contract tower operations.
  • Not less than $200 million will be made available to sponsors of primary airports to provide relief from rent and minimum annual guarantees to on-airport car rental, on-airport parking, and in-terminal airport concessions located at primary airports.


The legislation authorizes $81.80 billion for educational agencies to prevent, prepare for, and respond to coronavirus, domestically or internationally. $22.7 billion of such amount will be made available to colleges and universities; $54.3 billion will be made available to elementary and secondary education.

A local educational agency that receives funds may use the funds for any of the following:

  • Purchasing educational technology (including hardware, software, and connectivity) for students who are served by the local educational agency that aids in regular and substantive educational interaction between students and their classroom instructors, including low-income students and children with disabilities, which may include assistive technology or adaptive equipment.
  • School facility repairs and improvements to enable operation of schools to reduce risk of virus transmission and exposure to environmental health hazards, and to support student health needs.
  • Inspection, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including mechanical and non-mechanical heating, ventilation, and air conditioning systems, filtering, purification and other air cleaning, fans, control systems, and window and door repair and replacement.
  • Other activities that are necessary to maintain the operation of and continuity of services in local educational agencies and continuing to employ existing staff of the local educational agency.
  • Coordination of preparedness and response efforts of local educational agencies with State, local, Tribal, and territorial public health departments, and other relevant agencies, to improve coordinated responses among such entities to prevent, prepare for, and respond to coronavirus.
  • Providing principals and others school leaders with the resources necessary to address the needs of their individual schools.
  • Activities to address the unique needs of low-income children or students, children with disabilities, English learners, racial and ethnic minorities, students experiencing homelessness, and foster care youth, including how outreach and service delivery will meet the needs of each population.
  • Developing and implementing procedures and systems to improve the preparedness and response efforts of local educational agencies.
  • Training and professional development for staff of the local educational agency on sanitation and minimizing the spread of infectious diseases.
  • Purchasing supplies to sanitize and clean the facilities of a local educational agency, including buildings operated by such agency.
  • Planning for, coordinating, and implementing activities during long-term closures, including providing meals to eligible students, providing technology for online learning to all students, providing guidance for carrying out requirements under the IDEA and ensuring other educational services can continue to be provided consistent with all Federal, State, and local requirements.
  • Providing mental health services and supports.
  • Planning and implementing activities related to summer learning and supplemental afterschool programs, including providing classroom instruction or online learning during the summer months and addressing the needs of low-income students, children with disabilities, English learners, migrant students, students experiencing homelessness, and children in foster care.

Feel free to contact us if you have any questions.

Gery Chico and Jon Leach

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