On Sunday, December 27, 2020, President Trump signed a bill providing a long-awaited second COVID-19 relief package (“Relief Package”). The Relief Package contains a number of key provisions impacting employers as of January 1, 2021:

1. It offers a new round of forgivable PPP loans of up to $2 million to employers with less than 300 employees whose gross receipts have declined by 25% or more in any quarter of 2020 compared to 2019. Employers who took a loan in the first round of PPP lending are eligible for a second PPP loan, as long as they used (or will use) all of their previous PPP loan. If you received PPP funds in the first round, it clarifies that expenses used for PPP forgiveness are tax deductible, and if your PPP loan was for $150,000 or less, it offers a new, simple one-page form to apply for forgiveness.

2. It does not extend the mandates of the Emergency Family and Medical Leave Expansion Act (“EFMLEA”) or the Emergency Paid Sick Leave Act (“EPSLA”) under the Families First Coronavirus Response Act (“FFCRA”), which expire December 31, 2020, but does allow tax credits to employers for “FFCRA like” paid leave benefits paid to employees through March 31, 2021.

3. It provides for continued federal assistance to unemployed workers with supplemental weekly benefit payments of $300 and an 11 week extension of the maximum benefit period (now reduced to 10 weeks due to the President’s delay in signing), through March 14, 2021.

The Details:
1. New Round of Forgivable PPP Loans

The new Relief Package sets aside $284 billion in new PPP loan funding, which is available to employers whether they participated in the first round of lending or not.


To be eligible, employers must:

  • Have experienced a decline of 25% or more in gross receipts (income) in any quarter of 2020 compared to 2019. Gross receipts will likely exclude funds from PPP loans or other loans/grants.
  • Have been in business prior to February 15, 2020.
  • Have used (or will use) all previous PPP loan amounts, if received.
  • Have fewer than 300 employees.

Amounts Available

The maximum loan amount per employer is $2 million. As with the first round of PPP, most employers can take a loan amount up to 2.5 times their average 2019 monthly payroll costs. Employers in certain industries that have been particularly hard hit by the pandemic, including hotels and restaurants, can take up to 3.5 times their average 2019 monthly payroll costs.

The Relief Package includes set-asides for small businesses (those with less than 10 employees) and those located in low- and moderate-income areas, which were disproportionately shut out of the first round of PPP lending. It also allocates $15 billion in grants (not loans) for cultural and entertainment providers like performing arts venues, movie theaters and museums.

The Relief Package also allocates funds for a new round of EIDL (Economic Injury Disaster Loan) grants for businesses in low-income communities. Additionally, employers who receive both an EIDL advance grant and a PPP loan are no longer required to deduct the EIDL advance amount from their PPP forgiveness amount.


The new Relief Package clarifies that expenses used for PPP forgiveness are now tax deductible (reversing a prior Treasury Department decision), and for PPP loans of $150,000 or less, lenders will be provided a new, simple one-page form for borrowers to use to apply for forgiveness. These changes apply to the new round of PPP loans as well as the previous round.

Additionally, while borrowers are still required to use at least 60% of PPP funds on payroll expenses, the categories of non-payroll expenses that are forgivable are now much broader, including payment for software, cloud services, accounting and human resources expenses, as well as the cost of goods and services ordered or contracted before or during the loan period.

What Employers Should Do Now

To secure a PPP loan before this new round of funding gives out, employers should be prepared to apply on the first day the applications open by:

  • Figuring out your income by quarters in 2020 and 2019.
  • Contacting potential lenders to find out whether they will be participating in this round of PPP. Have a couple of lending sources lined up and ready to go.
  • Pay attention to application opening dates and deadlines, and apply on day one for everything you believe you may qualify for.

2. FFCRA Leave Becomes Optional After December 31, 2020

FFCRA required most employers to provide eligible employees who were unable to work for COVID-19-related reasons up to 2 weeks of paid leave under the EPSLA and 10 weeks of paid leave under the EFMLEA. For private employers, the requirement to provide this paid leave was offset by dollar-for-dollar payroll tax credits for wages paid to employees taking paid leave. These FFCRA provisions expire on December 31, 2020 and are not extended by the new Relief Package.

However, the Relief Package allows private employers to continue to offer FFCRA leave on a voluntary basis, and those who do can still claim dollar-for-dollar payroll tax credits on wages paid to employees through March 31, 2021, provided the leave is available and paid as would be required by the FFCRA if it still applied.

What Employers Should Do Now

Employers will need to decide whether extending FFCRA leave on a voluntary basis after December 31, 2020 makes sense from a financial and human resources perspective, and then revise (or eliminate) their existing FFCRA paid leave policies and notify employees of any such policy changes.

3. Enhanced Unemployment Benefits

The CARES Act extended the unemployment benefit period by 13 weeks for individuals receiving unemployment benefits. The New Relief Package extends that benefit period by an additional 11 weeks, making the total extended unemployment eligibility period 24 weeks.
The new Stimulus Package also reinstates the supplemental federal unemployment benefit provided under the CARES Act, albeit at a lower weekly rate than before. The Relief Package provides for additional federal unemployment benefits of $300 per week to eligible unemployed workers until March 14, 2021 (reduced from the previous $600 per week that expired in July). The Relief Package offers no retroactive unemployment benefits.