9 Implications the New Coronavirus Stimulus Bill has for VRMs
Congress and the Senate just passed a $900 billion pandemic relief bill that includes enhanced unemployment benefits, direct cash payments, and a second round of PPP.
On top of this, The U.S Travel Association Lobby was able to lobby for some favorable clauses that will help the Travel industry make it through these difficult times. (I bolded some of those clauses in the below summary.)
The full bill text (All 5500+ page 🙄) was released Monday afternoon. Although it's not final yet, Trump is expected to sign it into law in the coming days/weeks before he will leave office.
Here's what's in it that is applicable to the VRM's that are reading this!
1. Unemployment Benefits
Under this bill, the jobless would receive a $300 weekly federal enhancement in benefits for 11 weeks, from the end of December through March 14 under the deal.
The amount is half of the earlier federal boost, which ran out at the end of July.
2. $600 Checks
The package would send direct stimulus payments of $600 to individuals
The payments start phasing out for individuals with adjusted gross income of more than $75,000, and those making more than $99,000 would not receive anything. The income thresholds would be doubled for couples.
The amounts will be based on 2019 income. Those who filed their 2019 tax returns will receive their money automatically, as well as Social Security recipients and those who uploaded their bank account information using the IRS's online portal to receive their first payments.
3. 2nd Round of PPP Loan Funding
The bill would reopen the Paycheck Protection Program so that some of the hardest-hit small businesses can apply for a second loan. It would provide $284 billion for PPP and extends the application deadline to March 31, 2021.
The second loans would be limited to those with fewer than 300 employees that have seen drops of at least 25% of their revenue during the first, second or third quarter of 2020. It would also reduce the amount a borrower can receive from $10 million to $2 million
It carves out $12 billion for minority-owned businesses
Expressly forbids PPP loans to publicly traded companies.
4. PPP Loan Clarification & Favorable Rules to the Travel Industry
It gives businesses more flexibility on how they spend the money and simplify the forgiveness process for loans under $150,000.
Destination Marketing Organizations (DMO's) will be eligible for the 2nd round of PPP loans.
Expands the list of PPP-covered expenses to the cost of supplies and inventory, software and cloud-based services, uninsured damages from public disturbances in 2020, and measures to address COVID-19 health and safety guidelines (i.e. PPE)—in addition to payroll, mortgage debt interest, rent, and utilities.
Allows borrowers to deduct expenses covered by PPP loans from their taxes.
Continues to require at least 60% of loan proceeds to be used on payroll, capping covered non-payroll expenses to 40% of the loan.
Going forward, for both first-time and second-time PPP applicants, the loan amount is based on 2.5x average monthly payroll, up to $2 million, for each loan. However, for lodging and food services businesses, the loan amount is based on 3.5x average monthly payroll, up to $2 million.*
More granular details in this blog post
*It's not 100% clear if "lodging" includes VRMs right now. Updates to follow
#5. Economic Injury Disaster Loan (EIDL) Program
Provides $40 billion to extend Small Business Administration (SBA) EIDL grants through December 31, 2021.
Sets aside $20 billion for employers in low-income areas with 300 or less employees, and experiencing at least a 30% economic loss, allowing them to receive a $10,000 grant, or an amount equal to the difference between what they previously received and $10,000.
Removes the requirement for EIDL advances to be deducted from the calculation of PPP loan forgiveness.
#6. Live Venue Grant Program
Provides $15 billion for SBA grants to concert venues, performing art centers, theaters, and museums with 500 or less full-time equivalent employees. Eligible employers must demonstrate at least a 25% decline in revenue.
The grant amount is based on 45% of the employer’s gross revenue in 2019, up to $10million.
This will help maintain popular venues in tourist destinations from shutting down forever
#7. Business Meal Expense Deduction
Allows for full deductibility of ordinary business meal expenses incurred in 2021 and 2022.
#8. Extended Payroll Tax Deferral
Extends the time that employers have to pay back the employee’s portion of payroll taxes, as authorized through an executive order, to December 31, 2021.
#9. Clarification of Tax Treatment of EIDL Advances
Emergency EIDL Grants and Targeted EIDL Advances - Will not be taxable income. Expenses paid with the advance will continue to be deductible.