President Biden is expected to sign the bill prior to March 14, 2021 when UI benefits are set to expire. At Liberty Payroll and HR, we strive to keep our clients informed and compliant in how the new bill will affect your small business.

Several changes were made during the Senate’s consideration. The best known and reported change relates to minimum wage – which will not be part of the package. The following pieces are still in the package:

Employee Retention Credit

The measure, an employee retention credit established by the CARES Act, would extend through Dec. 31. The measure also would expand eligibility for the credit to new startups that were established after Feb. 15, 2020, and companies if their revenue declined by 90% compared to the same calendar quarter of the previous year. The credit would be capped at $50,000 per calendar quarter for startups.

Paid Leave Credits

The bill would extend tax credits for employer-provided paid sick and family leave through Sept. 30, which were established under the Families First Coronavirus Response Act.

The measure would also:

  • Increase the wages covered by the paid family leave credit to $12,000 per worker, from $10,000. 
  • Cover as many as 60 days of paid family leave for self-employed individuals, instead of 50. 
  • Expand the paid leave credits, including for self-employed individuals, to cover Covid-19 vaccinations or wait times for test results or diagnoses. 
  • Bar employers from receiving credits if their paid leave favors highly compensated employees, full-time workers, or employees based on tenure.

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EIDL Small Business Loans

Advance funds provided through the Small Business Administration’s Economic Injury Disaster Loan program and restaurant grants created by the bill would be excluded from gross income for tax purposes.

  • The measure would provide $15 billion for additional advance payments to eligible entities under the SBA’s Economic Injury Disaster Loan (EIDL) program.
  • The SBA would have to allocate $10 billion to covered entities that didn’t receive their full eligible advance payments under the year-end relief package. Those entities include recipients with 300 or fewer employees and economic losses of at least 30% over eight weeks compared with a similar period before the pandemic.
  • The remaining $5 billion would be set aside to make new supplemental payments of $5,000 to covered entities with 10 or fewer employees that had economic losses of more than 50% during the covered period.

Paycheck Protection Program

Program Funding: Increase lending authority by $7.25 billion, to $813.7 billion.

Eligible Tax-Exempt Groups: Expand eligibility to cover more tax-exempt groups, including 501(c)(5) labor organizations, 501(c)(7) social and recreation clubs, and 501(c)(8) fraternal benefit societies. Religious educational groups that might otherwise be barred under SBA rules would be permitted. 501(c)(4) social welfare groups, such as AARP, the ACLU, Americans for Prosperity, and the National Rifle Association, would still be prohibited.

The additional tax-exempt groups couldn’t employ more than 300 employees per location or spend more than $1 million annually or 15% of their time on lobbying activities.

Larger Nonprofits: Some nonprofits that currently qualify for PPP loans, such as 501(c)(3) groups, cannot have more employees than the SBA’s size standards for the relevant industry and are subject to the agency’s restrictions for affiliated entities.

The measure would replace those rules, allowing 501(c)(3) groups with as many as 500 employees per physical location to participate without further restrictions.

Online News Publishers: Internet-only news publishers that were previously ineligible could receive PPP loans if they have 500 or fewer employees or a size set by the SBA per location. They would have to certify that the funds will be used to support local news.

SBA affiliation rules and a ban on publicly traded companies would be waived for online news outlets seeking loans.

Loan Forgiveness: The measure would expand PPP loan forgiveness to include payments made for premiums on behalf of individuals who qualify for COBRA health insurance continuation coverage.

The change would apply to loan forgiveness applications received following the measure’s enactment.

Restaurant Grants

Provide $28.6 billion for a Restaurant Revitalization Fund to be administered by the SBA.

Eligible recipients would include restaurants, bars, food trucks, and caterers, including businesses in airport terminals and tribally owned entities.

Disqualified businesses would include those run by state or local governments, companies that manage more than 20 locations including affiliates, live venues seeking grants under the year-end Covid-19 relief package, and publicly traded companies.

For 60 days following the measure’s enactment, $5 billion would be set aside for eligible entities with gross revenue of $500,000 or less in 2019. The SBA would also have to prioritize awards for small businesses owned by women, veterans, and socially or economically disadvantaged individuals during an initial 21-day award period.

Other grant funds would be awarded on a first-come, first-served basis.

Grant amounts would cover the difference between an entity’s revenue in 2020 compared with 2019. Awards would be reduced by amounts received through the Paycheck Protection Program.

Aggregate awards made to an entity and its affiliates couldn’t exceed $10 million and would be limited to $5 million per location.

Eligible expenses generally would include payroll costs, mortgage and rent payments, supplies, normal food and beverage costs, and paid sick leave.

Funds could be used through Dec. 31, or a date set by the SBA that’s no later than two years after the measure’s enactment.

For more information and assistance, please speak with your CPA.

Liberty Payroll and Human Resources Services

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