Authors: Kathleen Alt and Aisha I. May

In March 2020, the “Coronavirus Aid, Relief, and Economic Security Act” (the “CARES Act”) was signed into law in order to provide both individuals and businesses with relief. On December 21, 2020, Congress approved the second stimulus packages of the pandemic, which includes $900 billion in relief (the “Relief Bill”).  President Trump signed the Relief Bill on December 27, 2020, but has indicated that he is dissatisfied with the Relief Bill. However, as the United States transitions to the Biden administration, BHGR expects major revisions to the Relief Bill with the new administration’s proposed stimulus package. This memorandum summarizes several relevant provisions in the Relief Bill.


The CARES Act established the “Paycheck Protection Program” (“PPP”), which was meant to provide small businesses with loans to help with pandemic related expenses and impacts. The Relief Bill includes a second round of the Paycheck Protection Program (“PPP2”), which is available to qualifying small businesses. PPP2 will still be administered by the U.S. Small Business Administration (the SBA), which is required to set regulations no later than 10 days after the Relief Bill has been enacted. A bullet-point summary of PPP2 is set forth below.

  • PPP2 essentially restarts PPP and allows borrowers to seek first or second loans, as the first round of PPP loans ended in August 2020.
  • PPP2 creates a second draw loan that is capped at $2 million (a reduction from the previous $10 million cap). Qualifying entities are:
    • Entities that employ no more than 300 employees.
    • Have used or will use the full amount of its first loan.
    • Businesses that have shown a significant reduction (25% or more) in gross revenue from any 2020 quarter.
    • The list of eligible entities was expanded to include specific 501(c)(6) organizations, FCC license holders, and newspapers with more than one physical location (so long as there are no more than 500 employees per physical location).
  • Under PPP2, employers must spend 60% or more of their loan on payroll costs.
  • Entities must have been in operation on February 15, 2020, to be eligible for the loan.
  • PPP2 expands the list of acceptable uses for PPP funding to include:
    • Operation expenditures – payment for any business software, cloud computing, other human resources, or accounting needs.
    • Property damage costs due to public disturbances that occurred during the year 2020.
    • Supplier costs – expenditures to a supplier.
    • Worker protection expenditures – including personal protective equipment.
  • Under both PPP and PPP2 businesses can deduct expenses paid with forgiven PPP loans.
  • PPP2 creates a simplified forgiveness application for loans no more than $150,000.
  • PPP2 also sets aside $12 billion for minority-owned businesses specifically and $15 billion for live venues, independent movie theaters, and cultural institutions.

On January 6, 2021, the SBA issued two Interim Final Rules (IFRs) addressing both PPP and PPP2. The IFRs offer guidance on the following issues:

  • The PPP reopened the week of January 11,2021, for new borrowers and certain existing PPP borrowers. Initially, on January 11, 2021, only community financial institutions will be able to make First Draw PPP Loans and Second Draw PPP Loans on January 13, 2021. The SBA enacted this rule to ensure that the smallest businesses and underserved communities have access to the loans. However, PPP and PPP2 loans will open to all participating lenders shortly after (at an unspecified date).  
  • PPP and PPP2 loans will be available through March 31, 2021.
  • The IFRs clarifies the flexible base periods for PPP and PPP2 borrowers. New PPP borrowers can choose between 2019 or 2020 as the base period to calculate their maximum loan amount based on the borrower’s payroll costs. To simplify their calculations, PPP2 borrowers can use payroll costs during 2020.
  • The IFRs provided that “temporarily closed or suspended” businesses are eligible to apply for PPP and PPP2 loans. However, it prohibits “permanently closed” businesses that have no goal of reopening from applying for a PPP or a PPP2 loan. The SBA did not provide any criteria regarding how it will make this distinction.
  • The Relief Bill used language that seemingly barred any publicly traded borrowers from receiving PPP or PPP2 loans. The IFR clarified that the prohibition does not apply to subsidiaries of the publicly traded borrower that want to apply for PPP or PPP2 loans.
  • The IFRs provided that PPP and PPP2 borrowers may use the loans to cover “new eligible expenses” (the Relief Bill provided new expenses that the loans may be used towards), including operations expenditures, property damage costs, and worker protection expenditures.


The Relief Bill includes several tax credit opportunities for businesses and individuals, and it extends some of the CARES Act pandemic provisions. The relevant extensions and credits are summarized below.

  • Division N – Subtitle B – COVID related Tax Relief Act of 2020
    • Section 274 – Extension of Certain Deferred Payroll Taxes
      • The Relief Bill extends the repayment deadline for those who opted-into the employee-side payroll tax deferral to December 31, 2021.
    • Section 275 – Regulations or guidance clarifying the application of educator expense tax deduction
      • Personal protective equipment, disinfectant, and other supplies used for COVID-19 spread prevention are eligible expenses for the Sec. 62(a)(2)(D)(ii) educator expense deduction. This section will apply retroactively to March 12, 2020.
    • Section 280 – Application of Special Rules to Money Purchase Pension Plans
      • The Relief Bill adds money purchase pension plans to the retirement plans that allow individuals to make penalty-free withdrawals for coronavirus related expenses.
  • Division EE – Taxpayer Certainty and Disaster Tax Relief Act of 2020
    • Section 101 – Reduction in Medical Expense Deduction Floor
      • Allows individuals to deduct (itemized) medical expenses that exceed 7.5% of one’s adjusted gross income. This is a reduction from the 10% floor.
    • Section 207 – Extension and modification of employee retention and rehiring tax credit. This section includes an extension and improvement of the employee retention tax credit that was a part of the CARES Act. This tax credit is summarized below:
      • An extension of the employee retention tax credit through July 1, 2021.
      • An increase in the credit rate from 50% to 70% of qualified wages.
      • An increase in per employee credible wages from $10,000 per year to $10,000 per quarter.
      • It includes rules that allow new employers (businesses that were not established in or before 2019) to be able to claim the credit. 
      • Provides that businesses that receive PPP loans may qualify for the employee retention tax credit.
    • Section 210 – Temporary allowance of a full deduction for business meals.
      • The Relief Bill expands the business meals deduction to 100% for both 2021 and 2022.
    • Section 212 – Certain charitable contributions deductible by non-itemizers.
      • The Relief Bill extends the charitable contributions deductible by nonitemizers through 2022.
      • It modifies the $300 charitable deduction for 2021 and increases the maximum deductible amount to $600 for married couples.


The Relief Bill includes direct payments of $600 to individuals with an adjusted gross income of up to $75,000 and $1,200 to couples with an adjusted gross income of no more than $150,000. Individuals making more than $99,000 are not eligible to receive a payment. Eligible families with children can receive an additional $600 per child. The amounts individuals and families receive is based on their 2019 incomes. On December 22, 2020, President Trump announced that he does not support the $600 payment and has asked Congress to increase the amount to $2,000 per individual or $4,000 per couple.

As of December 2020, more than 12 million Americans are facing unemployment and need unemployment assistance. The Relief Bill includes payments of $300 per week for unemployed individuals for 11-weeks, which extends federal unemployment benefits through March 2021. It also extends the Pandemic Unemployment Assistance for the same 11-week period, providing $100 per week of additional benefit. The Relief Bill also includes a provision that requires States to set up a proper method for employers to inform the state when an individual refuses to return to work.


The Relief Bill includes $82 billion in aid for schools and colleges, around $54 billion of that will go to pre-K-12 schools. Like the CARES Act, school districts will have flexibility on how to use the money. Additionally, the aid is not contingent on schools’ reopening for in-person learning. For higher education, in addition to the $22 billion in aid, the Relief Bill simplified the Free Application for Federal Student Aid (FAFSA).  Furthermore, the Relief Bill contains $10 billion in aid for childcare providers that struggled throughout the coronavirus pandemic to help with supplies and operational costs. 

The full extent to which schools may use the aid it receives to improve its ventilation systems has yet to be fully determined: however, the Relief Bill provides the following guidance.  

  • Division M – Title III – Section 312 – Governor’s Emergency Education Relief Fund
    • In this section, the Relief Bill reserves $2.75 billion to help non-public schools with specific types of assistance and services.
    • Furthermore, this section provides that States and their Governors may use Emergency Education Relief grants to provide emergency support to local educational agencies, institutions of higher education, or education-related entities that the State’s educational agency or the Governor deems to have been most significantly impacted by the coronavirus. The grants will allow such local educational services, institutions, and entities to support their students and to support the on-going functionality of the local educational agency, institutions, and education-related entities.
  • Additionally, under Division M – Title III – Section 312 – Governor’s Emergency Education Relief Fund,non-public schools may use the services or assistance that they received under this section to improve ventilation systems, including windows or portable air purification systems to ensure healthy air in the non-public school.
    • In addition, educational agencies that receive funds under this section may use the funds for inspections, testing, maintenance, repair, replacement, and upgrade projects to improve the indoor air quality in school facilities, including ventilation and air conditioning systems, filtering, purification, and other air cleaning, fans, control systems, and window and door repair and replacement.

Related to the Relief Bill’s provisions on schools’ ability to improve their ventilation systems are the unexpected provisions about climate change. The Relief Bill contains various progressive climate change provisions. The overall impact that these provisions may have has not been fully determined, but the following is a summary of the provision concerning hydrofluorocarbons (“HFCs”).

  • Division S – Section 103 – American Innovation and Manufacturing of the Relief Bill gives the Environmental Protection Agency a firm mandate to phase out HFCs that are often used in refrigeration and air conditioning units. This section of the Relief Bill seeks to reduce the importing and production of HFCs in the United States and replace HFCs with safer alternatives to reduce the impact that planet-heating HFCs have on the current climate crises. Currently, there are several industries that produce a safer alternative.


The Relief Bill includes billions in aid for rental assistance, nutrition assistance, and hospital support. The provisions regarding these services expand the aid provided in earlier relief packages or provide new support for existing programs. A summary of that aid is set forth below.

  • Section 501 – Emergency Rental Assistance
    • The Relief Bill includes $25 billion in aid for federal rental assistance.
    • Under the Relief Bill, the funds given to an eligible grantee may be used for the following:
      • No less than 90% of the funds received by an eligible grantee may be used for – rent; rental arrears; utilities and home energy costs; utilities and home energy costs arrears; and other expenses related to housing incurred due, directly, or indirectly, to the coronavirus outbreak.
      • Eligible grantee under this section is defined as a State, a unit of local government, an Indian tribe or its tribally designated housing entity, and the Department of Hawaiian Homelands.
  • Section 502 – Extension of Eviction Moratorium
    • The federal residential eviction ban and protection moratorium, which is set to expire at the end of this year, was extended through January 31, 2021.
  • Chapter 1 – Section 702 – Supplemental Nutrition Assistance Program (“SNAP”)
    • Beginning on January 1, 2021, through June 30, 2021, SNAP benefits will increase by 15%. The Relief Bill is the first relief package to expand SNAP since the pandemic began.
  • Chapter 2 – Commodity Distribution
    • Section 711 – Emergency Food Assistance Program
      • The Relief Bill will provide $400 million in assistance to food banks and food pantries.
    • Section 712 – Commodity Supplemental Assistance Program
      • The Relief Bill contains $13 million in aid for the Commodity Supplemental Assistance program, an assistance program that provides nutrition services for thousands of elderly Americans on a monthly basis.

Funding for hospital reimbursement for lost revenue due to the coronavirus pandemic, and funding for COVID-19 testing, tracing, vaccines, and mitigation programs will be discussed under this heading Hospital Support.

  • Hospital Reimbursement
    • The Relief Bill adds $3 billion to the Public Health and Social Services Emergency Fund that will be used to reimburse eligible health care providers for health care-related expenses or lost revenues that are attributable to the coronavirus pandemic.
    • Eligible Health Care Providers are defined as public entities, Medicare or Medicaid enrolled suppliers and providers, and for-profit or not-for-profit entities that provide diagnoses, testing or care for individuals with possible or actual cases of COVID-19.
  • COVID-19 Testing and Tracing
    • The Relief Bill offers States, localities, territories, tribes, tribal organizations, urban Indian health organization, or health service providers to tribes, over $20 billion in funding to help with expenses for testing, contact tracing, containment, and mitigation to monitor and reduces the spread of COVID-19.
    • The funding may be used for test manufacturing (active infection and prior exposure tests), procurement, and distribution. In addition, it may be used for the development of testing plans and testing equipment, including personal protective equipment needed for administering tests.
  • Vaccine Funding
    • The Relief Bill includes over $20 billion in funding for the purchase and administration of vaccines and therapeutics to respond to the coronavirus pandemic.
    • Additionally, the Relief Bill provides an additional $8 billion to help ensure broad-based distribution and access to the coronavirus vaccine.

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