We are pleased to report that Congress has officially passed into law its latest form of COVID-19 relief legislation, the Coronavirus Response And Relief Supplemental Appropriations Act (the “Act”). This $900 billon relief bill represents months of negotiation by Congressional leaders, with its impacts sure to be felt nationwide almost immediately.
Of the many items included in the 5,500+ page bill, there are three in particular that most directly affect you as a Texas tourism operator: Paycheck Protection Program re-authorization, unemployment benefits, and direct payments. Please see the below summary of these key provisions.
Paycheck Protection Program (PPP): The Act renews the PPP with nearly $300 billion in funding. However, there are notable differences in this renewal compared to how the program was originally established in the CARES Act from March of this year: Allows for a PPP “second draw” loan, capped at a maximum amount of $2 million per borrower. The original PPP provides a business with a forgivable loan based on 2.5 times its monthly payroll costs. Under the new law, however, hotels and restaurants can seek forgivable loans based on 3.5 times monthly payroll costs. The Act expressly provides by statute that PPP loans are tax-deductible. The prior CARES Act allowed businesses with fewer than 500 employees to access loan funds. However, that threshold in this Act has now been reduced to businesses with 300 or fewer employees. Businesses must 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. PPP eligibility is now extended to 501(c)(6) entities and destination marketing organizations (DMOs), which represents a major lifeline to operations around our state so critical to promoting safe travel and the recovery of tourism in Texas. Simplified PPP loan forgiveness application for loans under $150,000 (one-page certification).
Expands list of eligible expenses to include software, cloud computing, HR, accounting, property damage not covered by insurance, supplier costs, and Personal Protective Equipment (PPE). PPP Borrowers can now select a covered period for as short as 8 weeks or as long as 24 weeks. Repeals a CARES Act provision requiring borrowers to deduct EIDL advance from PPP loan amount.
*Note: You will want to check with your local bank for specific information about when you will be able to apply for a(n) (additional) PPP loan. Currenlty, applications will not be accepted by SBA lenders until the Treasury Department has issued additional guidelines (if any). It is unclear at this time how soon that could be, so it is advisable to remain in touch with your local bank/SBA lender for information about when you may apply. If you need a SBA lender check our supplier page on TACOmembers.com.
Unemployment Benefits: The Act includes an additional unemployment benefit of $300 per week (in addition to states’ unemployment insurance). The Act ensures these additional benefits for ten weeks, ultimately ending on March 14, 2021. Again, this provision is similar to what was initially passed in the CARES Act, but at a reduced amount. Whereas the CARES Act authorized an additional $600 per week benefit, this renewed benefit is structured the same (supplemental to state unemployment payments) but at half of the original $600 rate.
Direct Payments: The Act includes direct payments of $600 per person for children and for adults making up to $75,000 per year, with the size of the direct payment decreasing on a graduated scale thereafter. Income levels are based on 2019 tax returns. Treasury Secretary Steven Mnuchin has publicly stated that Americans with direct deposit information on file with the IRS could begin seeing the payments in their bank accounts beginning now and into the next couple of weeks.
There are many other measures included in the Act such as funding for schools, vaccine distribution, contact tracing, COVID-19 testing, nutrition assistance, child care, access to broadband internet, transportation, and others. However, the above three items represent those that are most relevant to your business as Texas campground operators.
TACO Member Updates 