On December 27, 2020, President Trump signed into law another coronavirus relief act (the Consolidated Appropriations Act, 2021) to help businesses through the COVID-19 pandemic. This Act, among other things, extends employer tax credits for emergency paid leave, offers a second round of PPP loans for qualifying employers, and allows more employers to qualify for the Employee Retention Tax Credit.
While the Consolidated Appropriations Act contains 5593 pages addressing many, many provisions, here’s our list of employer FAQs regarding emergency paid leave and PPP loans:
Is the FFCRA extended for employers to pay Emergency Paid Sick & FMLA leave?
Yes. While the Act says that the mandate for employers to provide emergency paid leave is not extended past Dec. 31, 2020, employers who voluntarily choose to provide qualifying paid FFCRA leave may do so and receive federal tax credits for leave paid through March 31, 2021.
Why would I not want to offer Emergency Paid Sick & FMLA leave?
There are a few reasons why employers wouldn’t want to offer emergency paid leave come 2021. For instance, some employers have had to drop down to skeleton crews while employees were off on paid leave when perhaps they didn’t need to be away the full two weeks. Others had employees take advantage of the system with illegitimate doctor’s notes claiming their need to quarantine (yes, those employees were terminated). Another reason may be the administrative burden placed on companies that don’t use an outsourced payroll provider.
If, however, you continue offering emergency paid sick and/or family medical leave, you’ll receive tax credits for qualifying leave taken through March 31, 2021. Remember, this leave is for employees who are forced to quarantine (and are unable to work remotely) and/or care for their children who are unable to attend school or daycare.
Is there a new PPP loan available through the Consolidated Appropriations Act?
Yes, businesses may apply for a second PPP loan through this Act.
How does my business qualify for this second PPP loan?
To qualify, employers that had already applied for and received their first PPP loan may be eligible for a second PPP loan if they:
- Employ 300 or fewer employees;
- Confirm under penalty of perjury they need these funds to support ongoing operations;
- Have used or will use the full amount of their first PPP loan for qualifying expenses; and
- Show a 25% reduction in gross receipts in the same quarter of 2020 as compared to 2019.
If I didn’t apply for an original PPP loan under the CARES Act, can I still apply?
Yes, the Consolidated Appropriations Act reopens PPP loans for businesses that didn’t apply previously and extends funding for first-time PPP loan applicants through March 31, 2021 or until funds are exhausted. To qualify for a first-time PPP loan, you need to employ fewer than 500 employees. Amounts are capped at $2 million.
How much money is available for the second PPP loan under the Consolidated Appropriations Act?
The Act allocates $284 billion in funding for small business loans, capping at $2 million per business. Your company’s amount is calculated at 2.5 times the average monthly payroll costs in 2019 or 12 months prior to your loan application. (Restaurants and businesses in the hospitality industry calculate their rate at 3.5 times their average monthly payroll costs.)
What are the requirements to receive loan forgiveness for the second PPP loan?
To receive loan forgiveness for your second PPP loan, you must spend 60% on payroll costs and 40% on non-payroll costs. Loans with less than $150,000 will have a streamlined process for forgiveness.
What should I know about the Employee Retention Tax Credit?
Updated 4.14.21 – The Employee Retention Tax Credit (ERTC) is a potential way for your company to claim tax credits for employees on payroll whose wages are not already covered by a PPP loan and/or emergency paid sick or family leave. Please see this article for a comprehensive review about eligibility for claiming the ERTC.
Who should I ask with more questions about the Consolidated Appropriations Act?
Please contact your HR rep or email HR@stratus.hr to have your specific question about the Act answered. We will continue to dissect this comprehensive Act and highlight various employer FAQs.