CAMBRIDGE — The long-awaited second COVID-19 recovery package was signed into law Dec. 27, 2020. The package includes a second round of funding for both the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Advance Grant, though eligibility is more targeted for both programs.

The new law also makes a number of business-friendly tax changes to both programs, as well as extending some of the tax credits from the first recovery package. Here are the main takeaways from the COVID-19 Recovery 2.0 legislation that small business owners should know from the National Federation of Independent Business (NFIB), including a State of Maryland Grants update, announced by the governor in December as well.

“We fully expect all the funds allocated for the program to go fast so we encourage you to contact your banker today and start the process if you want to receive a first or second draw PPP Loan,” Dorchester Chamber President Bill Christopher said.

$50 Million for Hotels and Hospitality Businesses

The governor announced that the State of Maryland is providing $50 million from its dedicated emergency rapid response fund to help hotels and hospitality businesses across the state. This funding will be distributed by local jurisdictions to go toward payroll expenses, rent, and utilities in order to keep operations going while travel is restricted.

$30 Million in additional relief for Bars and Restaurants

The governor announced another $30 million to replenish the state’s successful relief program for bars and restaurants, which will now total $80 million.

COVID Relief Bill

• $600 Stimulus checks • $300 a week additional unemployment payments • $284 Billion for PPP • $25 Billion renter’s assistance • $29 Billion for vaccine purchase and distribution • $82 Billion for Education • $13 Billion for Child Care and Nutrition • $7 Billion to Expand Broadband (and bunch of other stuff that got it to a really big number)

PPP 2.0

• Re-opened through March 31, 2021 with an additional $284 billion in funding.

• Businesses are eligible to receive a second forgivable loan if they: employ 300 employees or less; have used or will use the full amount of their first PPP; and demonstrate at least a 25% reduction in gross receipts in any quarter in 2020 compared to the same quarter in 2019.

• Small business owners can also apply for an initial PPP loan.

• Simplifies the forgiveness application for loans under $150,000.

• Allows borrowers to specify a covered period between 8 and 24 weeks for PPP 2.0 loans.

• Repeals the requirement of deducting an EIDL Advance Grant from PPP loan forgiveness amount. • Expands eligible expenses to include costs for modified business operations, supplier costs, and costs associated with complying with health and safety guidelines.

• Businesses in the restaurant and hospitality industries are eligible to receive loans of 3.5 times average monthly payroll, rather than 2.5 times.

EIDL Advance Grant 2.0

• Adds another $20 billion for EIDL Advance Grants. • Eligible small businesses are able to receive additional funding if their first EIDL Advance Grant was under $10,000.

• Businesses are eligible to receive an EIDL Advance Grant if they: employ 300 employees or less; demonstrate at least 30% reduction in gross receipts in any 8-week period between March 2, 2020 and December 31, 2021; and are located in a low-income community, as defined for the New Markets Tax Credit (NMTC).

Tax Provisions

• Reverses IRS ruling to allow tax deductions for PPP forgiven expenses and clarifies that PPP loan forgiveness is not taxable income.

• Clarifies that EIDL Advance Grants are not included in taxable income.

• Extends FFCRA tax credits through March 31, 2021.

• Extends the Employee Retention Tax Credit through July 31, 2021 and expands the credit allowing PPP borrowers to claim the credit retroactively and prospectively.

PPP Changes — Common Rules

• 60% must still be spent on payroll to get 100% forgiveness

• Simplified forgiveness for loans $150,000 and under

• Loan amount of up to 2.5 times average monthly payroll costs (not counting employees who make more than $100,000 annualized) in the year prior to the loan or the calendar year. PPP borrowers with NAICS codes starting with 72 (hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs.

• $10 Million cap on first loan, $2 Million Cap on second loan

• 1% interest rate if loan is not forgiven

Additionally, the SBA (Small Businesses Association) announced in a three-page guidance that it would take a number of steps to ensure increased access to the PPP for minority, underserved, veteran, and women-owned business concerns. Most notably, the SBA said it will accept PPP loan applications only from community financial institutions for at least the first two days when the PPP loan portal reopens.

Statistics and other information courtesy of the NFIB-Stimulus-2.0-Fact-Sheet-12282020 and Dorchester County of Chamber of Commerce.


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