Throughout the COVID-19 pandemic, HFA, through direct member engagement, has strongly advocated for additional fiscal relief for businesses struggling to survive. After months of negotiations, Congress and the Administration have agreed to include additional COVID-19 stimulus to the annual federal government funding legislation, creating a massive $2.3 trillion spending package.
Paycheck Protection Program Renewal
One of the new stimulus package’s key elements is a revitalized Paycheck Protection Program (PPP), which now includes a ‘second draw’ for eligible companies who have already received a PPP loan. Total funding for new and ‘second draw’ loan total nearly $284.5 billion
In order to better target this next round of loans, Congress included criteria for those companies receiving an additional PPP loan:
- Employ not more than 300 employees;
- Have used or will use the full amount of their first PPP; 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.
- Provides applicable timelines for businesses that were not in operation in Q1, Q2, Q3, and Q4 of 2019.
- Applications submitted on or after January 1, 2021, are eligible to utilize the gross receipts from the fourth quarter of 2020.
In addition to this new ability for another PPP loan, the categories of ‘non-payroll’ expenses have been expanded to include:
- 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 during 2020 are not covered by insurance.
- Covered supplier costs. Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect before taking out the loan 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.
Other significant changes to the PPP in the stimulus legislation include a simplified loan forgiveness application process for loans under $150,000 through a one-page form created by the Small Business Administration (SBA). It will require the borrower to describe the number of employees retained due to the PPP loan and the estimated amount of funds spent on payroll costs.
Congress also clarified that any forgiven PPP funds were eligible for deduction on the borrower’s taxes. This issue has strong bipartisan support and further clarifies congressional intent. The IRS had issued two contrary rulings to this interpretation, so specific language was needed.
Unemployment Insurance Extension
In addition to these PPP amendments, Congress extended federal and state unemployment benefits. The legislation includes an additional $300 per week federal unemployment insurance benefit and extends eligibility for state unemployment benefits for 11 additional weeks (an increase from 39 to 50 weeks). The provision has a sunset of March 14, 2021, for these expanded benefits.
Direct economic payments to individuals and families were also renewed but at a smaller amount – $600 per individual (income up to $75,000), $1,200 per couple (income up to $150,000), and $600 per child dependent.
The broader furniture industry has supported legislation that would create a national upholstered furniture flammability standard, in line with the current standard in California. The COVID-19 relief package includes this language which will create greater regulatory certainty for furniture retailers for this safety standard.
Congressional Democrats and the incoming Biden Administration characterized this $900 billion package as a ‘down payment’ on COVID-19 relief. The timelines described set up for another clash between Congress and the new Administration in Q1 2021. HFA will continue to advocate for meaningful policies and reforms that impact furniture retail operations during and beyond the COVID-19 pandemic.