By Nick Goldstein, vice president of regulatory and legal issues, ARTBA

COVID-19 relief legislation passed Dec. 21 by Congress fixes problems with the government’s earlier pandemic aid programs while also allowing a greater number of small businesses to access emergency funds. Specifically, the legislation makes significant reforms to the Paycheck Protection Program (PPP). It provides the PPP, created in April to assist small businesses, with an additional $284.5 billion and extends the program until March 31, 2021.

The measure resolves a long-standing dispute between Congress and the Trump administration over the tax treatment of PPP loans.  Specifically, under the legislation, forgiven PPP loans are not considered as taxable income and expenses paid for with forgiven PPP loan proceeds are tax deductible.  The clarification comes after weeks of ARTBA urging Congress to resolve this dispute, noting that taxing forgiven PPP loans would have caused significant, unforeseen liability for businesses receiving the funds, diluting the program’s overall impact.

Additional changes to the PPP include a simplified forgiveness process for loans of $150,000 or less as well as a “second draw” option for businesses who are still experiencing hardships to apply for an additional PPP loan. The PPP is also expanded to cover 501 (c)(6) organizations, including trade associations. The new 501 (c)(6) eligibility is subject to restrictions on lobbying activity.

As with all issues related to PPP loans, ARTBA members are encouraged to consult with financial professionals before making decisions about the program.

In addition to the PPP changes, it should also be noted that the legislation does not extend current requirements for employers to provide two weeks of additional sick leave or additional Family Medical Leave Act (FMLA) flexibility for COVID-related illnesses. However, it did extend the ability to claim a tax credit for employers who choose to continue to do so through March 31, 2021.

See ARTBA coverage of other Omnibus/COVID Relief News:

The PPP measure was passed as part of the massive year-end bill that also contained COVID relief legislation that would provide aid to a range of transportation programs, including $10 billion to state departments of transportation.  Learn more about aid for state DOTs.

The year-end legislation provides supplemental funding for transportation programs of nearly $4 billion above authorized levels. This is the fourth consecutive year transportation programs received supplemental spending.  Learn more about year-end spending bills.

The year-end legislation also reauthorizes legislation that supports marine transportation infrastructure programs and would finally enable the spending of funds in the Harbor Maintenance Trust Fund. Learn more about the Water Resources Development Act.