The long-awaited COVID-19 Relief Act was passed by Congress on December 21, 2020 and finally signed into law by President Trump on December 27, 2020. The so-called COVID-19 Relief Act consists of provisions on COVID-19 relief from a larger omnibus law - the Consolidated Appropriations Act, 2021 (CAA) - which also includes the Budget Act and several other provisions.
The forced closures imposed to protect public health due to the COVID-19 pandemic have brought most economic activity to a standstill, hitting businesses hard and causing people to lose their jobs. In response to the COVID-19 pandemic, a series of laws were passed to tackle the public health risks and economic crisis caused by the pandemic.
Previous COVID-19 Relief Laws
The Coronavirus Preparedness and Response Supplemental Appropriations Act of 2020, which came into force on March 6, 2020 as the first COVID-19-related law, provided $8.3 billion in emergency funding for federal agencies to combat the coronavirus pandemic. At the time, the Act was primarily aimed at combating the spread of the novel coronavirus through vaccine development and public health funding, as the economic impact of the COVID-19 pandemic was not so clear.
With the rapid spread of COVID-19, nationwide curfews have been imposed to prevent further spread of the novel coronavirus and ensure employee/customer safety. This has caused unprecedented economic disruption. Laws passed in March 2020 in response to the devastating economic impacts of the ongoing pandemic have provided much-needed economic assistance to businesses and people.
Enacted on March 18, 2020, the Families First Coronavirus Relief Act (FFCRA) provided $104 billion in funding for free COVID-19 tests, expanded unemployment benefits, mandatory paid leave for workers, Medicaid, and food assistance.
Signed into law on March 27, 2020, the Coronavirus Relief and Economic Security (CARES) Act provided a $2.2 trillion COVID-19 stimulus package, the largest economic stimulus package in US history, specifically for small businesses and middle- and low-income individuals and families.
Enacted on April 24, 2020, the Salary Protection Program and Health Care Improvement Act provided $484 billion in additional funding for small business loans, health care providers, and COVID-19 testing.
2021 COVID-19 Relief Act
Economic assistance programs provided by previous laws have mitigated the effects of the COVID-19 pandemic. Unfortunately, however, the pandemic and its economic impacts are still ongoing. Therefore, a new COVID-19 Relief package was needed.
The newly enacted Consolidated Appropriations Act, 2021 (CAA) includes the $1.4 trillion fiscal year 2021 Budget Act and the $900 billion COVID-19 Relief Act. The COVID-19 Relief Act provides an additional $900 billion in funding and tax cuts to combat the economic challenges caused by the COVID-19 pandemic. Provisions related to the COVID-19 Relief Act are included in the CAA in Section M - Coronavirus Response and Relief Supplemental Appropriations (CRRSA) Act, 2021, Section N - Coronavirus Response and Relief Additional Provisions (ACRR), and Section EE - Tax Provision Clarification and Disaster Tax Relief (TCDTR) Act.
The following summarizes key COVID-19 Relief Act funding provisions and opportunities for individuals, families and businesses still affected by the economic impact of the COVID-19 pandemic.
The COVID-19 Relief Law's Support for Individuals and Families
Incentive Checks (166 Billion Dollars)
The COVID-19 Relief Act authorizes the Treasury to make direct payments of up to US$600 per individual taxpayer (US$1,200 for married taxpayers filing joint returns) and per qualifying child under the age of 17. Payments start at an adjusted gross income (AGI) of USD 75,000 (USD 112,500 for heads of household and USD 150,000 for married taxpayers filing joint returns) and phase down by USD 5 for every additional USD 100 of income. For taxpayers without children, the payment amount is reset to zero when their adjusted gross income is USD 87,000 for individuals, USD 124,500 for heads of household and USD 174,000 for couples filing joint returns.
Unemployment Insurance (120 Billion Dollars)
The COVID-19 Relief Act extended the expiring unemployment insurance programs put in place by the CARES Act, with some modifications, until the week ending March 14, 2021:
- An additional payment of $300 per week is provided for employees receiving state unemployment benefits.
- The period of additional unemployment payments after the end of unemployment benefits under state law has been increased by 11 weeks, from 13 to 24 weeks.
- Unemployment payments for the self-employed, independent contractors, temporary workers and people with limited work histories were increased by 11 weeks, from 39 to 50 weeks.
- An additional $100 per week is provided for some workers who have both wage and self-employment income and are not eligible for the additional benefits provided under the CARES Act.
With these extensions to unemployment payments, individuals will be able to claim unemployment benefits for up to 50 weeks, with regular state unemployment payments and additional payments provided by the COVID-19 Relief Act.
Emergency Rental Assistance ($25 Billion)
The COVID-19 Relief Act extended the temporary evacuation ban imposed by the Centers for Disease Control and Prevention (CDC) from September 4, 2020 until January 31, 2021.
The law also allocated $25 billion to the Emergency Rental Assistance program to be used to pay rent and utility bills, including unpaid past rent and/or utility bills for eligible tenants. Each household can receive assistance for up to 12 months and can be extended for an additional 3 months if the family is at risk of homelessness. State and local government authorities distributing the funds are required to prioritize low-income households and households with unemployed individuals.
Covering Funeral Expenses (25 Billion Dollars)
The COVID-19 Relief Act sets aside $2 billion for the Federal Emergency Management Agency (FEMA) to distribute to states to assist families with coronavirus-related funeral expenses through December 31, 2020. It also waives the usual rule that states contribute 25% of the costs.
COVID-19 Relief Law's Economic Assistance for Hard-hit Businesses
Salary Protection Program ($284.5 billion)
The Salary Protection Program (PPP) was created by the CARES Act as a new program to support small businesses experiencing significant income losses and to encourage them to continue employing their workers. PPP loans were very popular as they were fully forgivable if at least 60% of the funds provided were used for eligible salary payments and the remainder for eligible non-salary payments. The first PPP, which ended on August 8, 2020, distributed $525 billion in loans to 5.2 million small businesses.
The COVID-19 Relief Act reopened the PPP with an additional $284.5 billion in funding, extending it to March 31, 2021. The law also expanded the businesses eligible for PPP loans to include non-profit enterprises with 300 or fewer employees and news organizations with 500 or fewer employees. Thus, eligible small businesses that did not receive a PPP loan in the first round were able to apply for a PPP loan. In addition, small businesses with 300 or fewer employees and at least a 25% decline in gross revenue between the same quarters in 2019 and 2020 will also be eligible for a second PPP loan if they have fully utilized or plan to fully utilize their first PPP loan. All PPP loans are 100% guaranteed by the SBA and can be fully forgiven if spent according to applicable guidelines.
Salary and non-salary expenses eligible for PPP loan forgiveness have been expanded to include more business expenses. These expenses are also forgivable for previous PPP loans that have not yet been forgiven.
To ensure that smaller and underserved businesses can access PPP loans faster and more efficiently, the COVID-19 Relief Act includes some special allocation provisions for new PPP funds. 40 billion dollars is earmarked for small businesses with 10 or fewer employees and businesses located in low- and moderate-income (LMI) areas. In addition, $30 billion is set aside for local lenders and small depository institutions to increase lending to hard-to-reach communities.
The COVID-19 Relief Law clarified that forgiven PPP loans are excluded from gross income and that expenses financed with a forgiven PPP loan can be a deduction item under normal tax rules.
Targeted EIDL Advance for Small Enterprises ($20 billion)
Economic Injury Disaster Loans (EIDL), the SBA's long-term direct loan program for businesses experiencing temporary revenue losses due to a disaster, became available to small businesses nationwide when the COVID-19 pandemic was declared a national emergency effective March 1, 2020.
The subsequent CARES Act expanded EIDL coverage to a wider range of enterprises and relaxed conditions to make it easier to obtain loans. Previously, EIDLs were only available to certain small businesses, private non-profit organizations and small agricultural cooperatives. The CARES Act extended EIDLs to businesses with no more than 500 employees, cooperatives, employee stock ownership plans (ESOPs), tribal small businesses and agribusinesses, and individuals operating under sole proprietorship or as independent contractors.
The CARES Act also introduced a new $20 billion Emergency EIDL Grant program (also known as the EIDL advance). Under the EIDL grant program, small businesses applying for EIDL can request an advance of up to $10,000, $1,000 per employee. If the advance request is approved, the SBA transfers the advance amount to the business within 3 days. The EIDL advance does not have to be repaid, regardless of whether the EIDL request is subsequently approved.
Due to the popularity of the Emergency EIDL Grant, all available funds were allocated as of July 11, 2020. Through the EIDL advance program, the SBA has provided $20 billion to 5.8 million small businesses employing 30.5 million people.
The COVID-19 Relief Act reopened the Emergency EIDL Grant program for smaller businesses in low-income areas hard hit by the economic disruption until December 31, 2020, with an additional $20 billion in funding. This time, however, eligible businesses will be able to receive the full $10,000 advance amount, and if they previously received an EIDL grant of less than $10,000, they will receive an advance equal to the difference.
Emergency Improvements to SBA Loans ($2 billion)
In addition to extending the EIDL until December 31, 2021, the COVID-19 Relief Act enhanced traditional non-disaster SBA loans (7(a), 504 and Microloans), making them more accessible to small businesses.
The COVID-19 Relief Act temporarily increased the 7(a) loan guarantee amount to 90%, increased the Express 7(a) loan limit, waived borrower and lender fees on 7(a) and 504 loans, improved refinancing rules for 504 loans, and provided greater access to microloans for businesses affected by the COVID-19 pandemic. The SBA was allocated $2 billion to carry out these emergency improvements.
SBA Debt Relief Payments ($3.5 Billion)
The COVID-19 Relief Act continued the SBA Debt Relief program established by the CARES Act with a funding of USD 3.5 billion. Under this program, the SBA pays principal, interest, and all related costs on eligible 7(a), 504, and Microloans that are performing loans.
Loans approved prior to the enactment of the CARES Act will be able to receive payments for an additional 3-month period (8-month period for very small borrowers who are considered underserved or very hard hit by economic problems) and loans approved after the CARES Act will be able to receive payments for a 6-month period. However, the monthly disbursement for each borrower is capped at a maximum of $9,000.
Grants for Operators of Closed Venues ($15 Billion)
Venue operators are among the most severely affected by the closure and stay-at-home orders imposed due to the COVID-19 pandemic. They have already suffered huge income losses and the future is still bleak for them. Moreover, until now, there have not been many sources of COVID-19 assistance available to them.
The COVID-19 Relief Act set aside a special allocation of $15 billion for closed venue operators. The law defines a closed venue operator as a natural or legal person that is a live performance venue operator or promoter, theatre producer or live performing arts organization operator, eligible museum operator, movie theater operator, or talent agent and meets certain requirements.
A closed venue will be eligible for a grant of up to $10 million if it is fully operational on February 29, 2020, has a revenue loss of at least 25% in any quarter in 2020 compared to 2019, and has commenced or intends to commence operations by the grant date.
The COVID-19 Relief Act set a staggered distribution timeline to ensure that grants are available first to individuals or organizations with the greatest losses. It also set aside $2 billion for eligible small businesses with 50 or fewer full-time employees.
Shuttered venue operator grants will be subject to increased scrutiny by the SBA to reduce the risk of fraud.
COVID-19 Relief Law Funds for Public Services
Education Stabilization Fund (82 Billion Dollars)
The COVID-19 Relief Act allocated an additional $82 billion to the Education Stabilization Fund until September 30, 2022:
- Primary and Secondary School Emergency Relief Fund ($54.3 Billion): For K-12 public schools affected by the pandemic
- Higher Education Emergency Relief Fund ($22.7 billion): For universities and colleges
- Governor's Emergency Education Relief Fund ($4.1 billion): For education-related pandemic relief, including $2.75 billion for K-12 private schools
- Remote Areas and Bureau of Indian Education ($819 million): For supplemental support to remote areas and programs operated or funded by the Bureau of Indian Education
Support to Public Health ($73 Billion)
To support public health, the COVID-19 Relief Act allocated $73 billion to the Department of Health and Human Services (HHS) for the following services:
- Centers for Disease Control and Prevention ($8.75 billion): To support public health agencies to distribute coronavirus vaccines, administer vaccines, and monitor and track vaccination progress to expand access and vaccination nationwide
- Assistant Secretary for Preparedness and Response ($22.945 billion): $19.695 billion for the Biomedical Advanced Research and Development Authority (BARDA) for the production and supply of COVID-19 vaccines and treatments and $3.25 billion for the Strategic National Stockpile
- Public Health and Social Services Contingency Fund (US$25.4 billion): USD 22.4 billion for testing, contact tracing and other activities necessary to effectively monitor and combat COVID-19, and USD 3 billion for additional grants to hospitals and health care providers
- National Institutes of Health ($1.25 billion): For research and clinical trials related to COVID-19
- Substance Abuse and Mental Health Services Administration ($4.25 billion): To increase mental health and substance abuse services and supports
- Administration for Children and Families ($10.25 billion): $10 billion for emergency assistance to child care centers and $250 million for the Head Start program
Transportation Aid (45 Billion USD)
The COVID-19 Relief Act provided $45 billion in assistance to the transportation sector, including the following items:
- Aid Grants for Airports (2 Billion USD): For operational and personnel costs of airports and commercial enterprises located at airports
- Departments of Transportation ($10 billion): To help state highway agencies and certain local transportation authorities recover losses from reduced traffic volumes caused by the pandemic
- Amtrak ($1 billion): Emergency funding for Amtrak
- Emergency Aid for Public Transportation ($14 Billion): $13.27 billion for cities and $679 million for rural areas
- Pandemic Relief for Aviation Sector Workers ($16 Billion): $15 billion to airlines and $1 billion to contractors for personnel payments
- Assistance for Transportation Service Providers ($2 Billion): For economic assistance to tour bus and coach operators, school bus companies, U.S.-flag cruise ship operators, and other U.S. transportation service providers
Nutrition and Agriculture Aid ($26 Billion)
The COVID-19 Relief Act allocated $26 billion for nutrition assistance and agricultural programs, $13 billion for each:
- Nutrition Assistance ($13 Billion): To increase assistance for the Supplemental Nutrition Assistance Program (SNAP) and other child nutrition programs
- Agriculture Programs ($13 Billion): To provide support to agricultural producers, growers and processors affected by the COVID-19 pandemic
Community Development Investment ($12 Billion)
The COVID-19 Relief Act provided $12 billion for Community Development Financial Institutions (CDFI) and Minority Depository Institutions (MDI), which provide credit and financial services to low-income and minority communities:
- Emergency Capital Investment Program-ECIP ($9 billion): To provide low-cost, long-term capital investments to MDIs and CDFIs
- CDFI Fund ($3 billion): To provide grants and other financial assistance to CDFIs to serve consumers, small businesses and nonprofit organizations in their communities
Broadband Internet Access Service ($7 Billion)
The COVID-19 Relief Act allocated $7 billion to increase broadband internet access for students, families and the unemployed. The new $3.2 billion Emergency Broadband Assistance will subsidize low-income families up to $50 per month for internet service (up to $75 on tribal lands) and up to $100 for low-cost internet access devices (laptops, desktops or tablets).
Covid-19 Funding for the US Postal Service ($10 Billion)
The COVID-19 Relief Act includes a provision that converts the loan into a grant by forgiving the $10 billion loan provided to the US Postal Service by the CARES Act.
You can contact us if you have any questions about the benefits of the newly enacted COVID-19 Relief Law or if you need professional support.