On December 27, 2020, the Consolidated Appropriations Act (CAA) was signed into law to provide financial relief to small businesses suffering from the impact of the COVID-19 pandemic. This legislation amends the PPP loan program that was established early in 2020 under the CARES Act.

New Expenses Eligible for PPP Loan Forgiveness for Companies that have not yet applied for forgiveness.

The bill gives PPP borrowers who have not yet applied for forgiveness the opportunity to spend proceeds on four new types of expenses. Those costs are eligible for forgiveness, and are subject to the overall 40% limitation attributable to non-payroll costs.

  1. Covered Operations Expenditures – Payments for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.
  2. Covered Property Damage Costs – Costs related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation.
  3. Covered Supplier Costs – An expenditure made by an entity to a supplier of goods that are:
    • Essential to the operations of the entity at the time at which the expenditure is made, or
    • Is made pursuant to a contract, order, or purchase order that was either 1) in effect at any time before the covered period with respect to the loan, or 2) with respect to perishable goods, in effect before or at any time during the period.
  1. Covered Worker Protection Expenditures – These are operating or capital expenditures that are required to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the CDC, or OSHA during the period beginning on March 1, 2020 and ending on the date on which the national emergency declared by the President under the National Emergencies Act expires. Eligible costs are those related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID-19. The term includes:
    • The purchase, maintenance, or renovation of assets that create or expand:
    • a drive-through window facility;
    • an indoor, outdoor, or combined air or air pressure ventilation or filtration system;
    • a physical barrier such as a sneeze guard;
    • expansion of indoor, outdoor, or combined commercial real property;
    • onsite or offsite health screening capability;
    • or other assets relating to the compliance with the requirements of certain protective guidance.
    • The purchase of covered materials described in section 328.103(a) of title 44, Code of Federal Regulations, or any successor regulation; particulate filtering facepiece respirators approved by the National Institute for Occupational Safety and Health, including those approved only for emergency use authorization; or other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor.
    • Not included in the definition of covered worker protection expenditures, however, are residential real property or intangible property.

More details to come

This is just a brief overview of one section within the massive 5,500 page, $900 billion COVID-19 aid bill. We will share additional details regarding all of the provisions that are most likely relevant to you or your business in the coming days. In the meantime, please don’t hesitate to reach out to us with any questions or concerns. We are always available to assist you during these challenging times.

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