Editor's note: Be sure to read the other articles in this series:

• Consolidated Appropriations Act deep dive: Impact on Families First Coronavirus Relief Act's paid leave provisions
• Consolidated Appropriations Act deep dive: Health and dependent care flexible spending accounts

When the Consolidated Appropriations Act of 2021 (CAA)  became law on December 27, 2020, it gave new life to two programs that have provided economic relief to American businesses from the early days of the pandemic: the Paycheck Protection Program and the Employee Retention Tax Credit. The new economic stimulus measure expands and improves upon these programs, which are helping companies continue to employ and pay their employees through the economic downturn, including by offsetting employee benefit costs.

Paycheck Protection Program

The Paycheck Protection Program (PPP) helps small and mid-sized businesses keep their workers insured and on the payroll by offering low-interest and largely forgivable loans.  The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted in March of 2020, created the PPP. After the initial PPP funding ran out within days of the program's launch, Congress appropriated more PPP funds this past June. The program expired before this second round of funding was exhausted.

The CAA reauthorizes the program and provides $284 billion additional dollars in funding for new PPP loans and a second funding opportunity for qualified existing PPP loan recipients. The Department of Treasury and the Small Business Administration (SBA) began accepting new PPP loan applications through community banks on January 11, 2021. Qualified existing loan recipients became able to apply for "second draw" loans through those banks on January 13, 2021. Other financial institutions began to accept new and "second draw" PPP applications by January 18, 2021.

Second draw opportunity

To be eligible for a "second-draw loan," a business must have:

• 300 or fewer employees;
• Used the full amount of their first PPP loan on forgivable expenses on or before the expected disbursement date for the second PPP loan; and
• Experienced a revenue reduction of 25% or more in gross receipts in any 2020 quarter compared to the same quarter in 2019.

For this purpose, "gross receipts" includes all revenue in whatever form received or accrued (following the entity's accounting method) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances. As long as it's forgiven, the value of a borrower's initial PPP loan does not count towards this gross receipt's calculation. Notably, for ease of administration, borrowers may show they have met the reduction in gross receipts standards by showing the reduction on their 2020 tax returns relative to 2019.  This provision avoids the need to break out the analysis by quarter.