On December 27, 2020, the President signed the “Consolidated Appropriations Act (CAA), 2021” which includes Division N – Additional Coronavirus Response and Relief (ACRR). ACCR authorizes $806.5 billion towards the Program and extends the Program to March 31, 2021

Included in the bill is clarification of tax treatment of forgiveness of covered loans as well as additional funding and an expansion of qualifying expenses.

Paycheck Protection Program Second Draw Loans: creates a second loan from the PPP, called a “PPP second draw” loan for smaller and harder-hit businesses, with a maximum amount of $2 million.


  • Employ not more than 300 employees
  • Have used or will use the full amount of their first PPP; and
  • Demonstrate at lease a 25 percent reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same 2019 quarter.
  • Be an eligible entity.

Clarification of tax treatment of Paycheck Protection Program loans 

The CARES Act provides that if a PPP loan recipient uses their PPP loan to pay payroll and certain nonpayroll costs, the PPP loan may be forgiven in an amount equal to those costs. PPP loan forgiveness does not give rise to taxable income and the Internal Revenue Code generally doesn’t allow a taxpayer to deduct expenses that are paid with tax exempt income. 

Sec. 276 clarifies that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan. This provision also clarifies that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven, and that the tax basis and other attributes of the borrower’s assets will not be reduced as a result of the loan forgiveness. The provision is effective as of the date of enactment of the CARES Act. The provision provides similar treatment for Second Draw PPP loans, effective for tax years ending after the date of enactment of the provision.

Additional PPP eligible expenses.

  • Covered operations expenditures. Payment for any software, cloud computing, and other human resources and accounting needs.
  • Covered property damage costs. Costs related to property damage due to public disturbances that occurred during 2020 that are not covered by insurance.
  • Covered supplier costs. Expenditures to a supplier pursuant to a contract, purchase order, or order for goods in effect prior to taking out the loan that are essential to the recipient’s operations at the time at which the expenditure was made. Supplier costs of perishable goods can be made before or during the life of the loan.
  • Covered worker protection expenditure. Personal protective equipment and adaptive investments to help a loan recipient comply with federal health and safety guidelines or any equivalent State and local guidance related to COVID-19 during the period between March 1, 2020, and the end of the national emergency declaration.

The provision allows loans made under PPP before, on, or after the enactment of this act to be eligible to utilize the expanded forgivable expenses except for borrowers who have already had their loans forgiven. 

Selection of Covered Period for Forgiveness

Borrowers may  to elect a covered period ending at the point of the borrower’s choosing between 8 and 24 weeks after origination.

Simplified Application for loans under $150,000

Simplified application process for loans under $150,000. A borrower shall receive forgiveness if a borrower signs and submits to the lender a certification that is not more than one page in length, includes a description of the number of employees the borrower was able to retain because of the covered loan, the estimated total amount of the loan spent on payroll costs, and the total loan amount. The borrower must also attest that borrower accurately provided the required certification and complied with Paycheck Protection Program loan requirements. SBA must establish this form within 24 days of enactment and may not require additional materials unless necessary to substantiate revenue loss requirements or satisfy relevant statutory or regulatory requirements. Additionally, borrowers are required to retain relevant records related to employment for four years and other records for three years. The Administrator may review and audit these loans to ensure against fraud.

This section applies to loans made before, on, or after the date of enactment, including the forgiveness of the loan.

Specific Group Insurance Payments as Payroll Costs

Employer-provided group insurance benefits are included in payroll costs. This includes group life, disability, vision, or dental insurance. 

This section applies to loans made before, on, or after the date of enactment, including the forgiveness of the loan.

Expanded Eligibility for Loans under the Paycheck Protection Program

FCC license holders and newspapers with more than one physical location, as long as the business has no more than 500 employees per physical location or the applicable SBA size standard; and makes eligible section 511 public colleges and universities that have a public broadcasting station if the organization certifies that the loan will support locally-focused or emergency information. It also waives affiliation rules for newspapers, TV and radio broadcasters, and public broadcasters, as long as the organization has no more than 500 employees per physical location or the applicable SBA size standard. 

Eligibility of 501(c)(6) and Destination Marketing Organizations for Loan Under the Paycheck Protection Program.

Expanded eligibility to receive a PPP loan to include Code Sec. 501(c)(6) organizations and destination marketing organizations if the organization has 300 or fewer employees and it does not receive more than 15% of receipts from lobbying and the lobbying activities do not comprise more than 15% of activities. There are additional conditions. 

Additional Provisions

Extension of FFCRA Sick Leave Credits until March 31, 2021; however, the employer obligation to pay sick and family leave under the FFCRA has not been extended).

Changes to the Employee Retention Credit include an increase of $10,000 per employee.  Annual limits apply per quarter and the credit is extended to July 1, 2021.

Employee Social Security Deferral repayment window expanded to December 31, 2021.