$900 Billion Stimulus Package Signed Into Law: Key Provisions – Finance and Banking

Yesterday, December 27, 2020, President Trump signed into legislation
the $900 billion financial stimulus package deal, which Congress handed
final week. This laws (H.R. 133) goals to assist the US
financial system by reauthorizing and offering extra funding for the
fiscal assist packages established by the Coronavirus Assist, Reduction,
and Financial Safety Act (“CARES Act”), which was signed
into legislation in March 2020. (See our
previous Legal Update on the CARES Act.) Specifically, the
laws targets help to small companies, unemployed
people, well being care suppliers, and colleges. It additionally features a
much-debated limitation on the Federal Reserve’s Part 13(3)
emergency lending authority. To succeed in a deal on the laws,
congressional negotiators determined to omit direct help to state and
native governments and COVID-liability protect laws from the
remaining invoice resulting from lack of bipartisan assist for these
provisions.

The laws is hooked up to a year-end omnibus appropriations
spending package deal to fund the federal government by means of the tip of fiscal
yr 2021. This spending package deal additionally consists of quite a lot of different
necessary items of laws, together with a number of extensions of
tax provisions, a reauthorization of the Pipeline and Hazardous
Supplies Security Administration, power laws, and
laws to deal with “shock medical billing.”

This Authorized Replace offers an outline of the invoice’s
financial help, monetary providers, and tax provisions. For
questions on different provisions within the laws, please contact
one of many authors listed on the finish.

Financial Help

The legislative package deal allocates greater than $900 billion throughout
a spread of packages, together with:

• $325 billion for small enterprise reduction.
  
  • $284 billion for loans by means of the Paycheck Safety Program
    (“PPP”), which exhausted its prior funding in August. The
    laws additionally makes a number of necessary adjustments to PPP, together with:
    
    
    • Simplifying the PPP functions, increasing the bills that
      PPP funds can be utilized for and nonetheless be forgiven, and increasing mortgage
      quantities for companies within the lodging and meals providers
      industries.

    
    

    • Allowing sure small companies which have skilled a 25
      % discount in quarterly gross receipts to obtain a second
      forgivable PPP mortgage.

    
    

    • Via a “maintain innocent” provision, permitting lenders
      to depend on certifications and documentations submitted by a
      borrower for a PPP mortgage and making certain that lenders not be topic to
      enforcement actions or penalties arising from PPP mortgage origination
      or forgiveness if the lender acts in good religion and all different
      statutory and regulatory necessities are glad.

    
    

    • Clarifying that debtors in chapter could receive PPP loans and
      that such loans might be handled as debt if the loans should not
      forgiven.

  
  

  • $15 billion in funding for reside arts and music venues,
    unbiased film theaters, and cultural establishments.




• Further federal unemployment advantages of $300 per week, for
  11 weeks ending March 14, 2021.




• Direct Financial Impression Funds of $600 for people making
  as much as $75,000 per yr and $1,200 for {couples} making as much as $150,000
  per yr, in addition to $600 for every baby dependent.




• $25 billion in emergency rental help for as much as 12 months
  of help to eligible households who’ve skilled a
  monetary hardship associated to COVID-19.




• $9 billion for the US Treasury Division
  (“Treasury”) to create an Emergency Capital Funding
  Program for investments in low- and moderate-income
  (“LMI”) monetary establishments for lending and funding
  in LMI and minority communities.




• $3 billion for the Neighborhood Improvement Monetary Establishments
  (“CDFI”) fund to be used in supporting CDFI’s response
  to the financial impression of COVID-19.




• $45 billion in transportation funding, together with $15 billion
  for airline payroll assist and $1 billion for airline contractor
  payrolls, $2 billion for airports and airport concessionaires, $14
  billion in transit funding to deal with transit company shortfalls,
  $10 billion in state freeway funding, and $1 billion in Amtrak
  funding.




• $82 billion at school funding, together with funding by means of the
  Governors Emergency Schooling Reduction Fund, Elementary and Secondary
  College Emergency Reduction Fund, and Greater Schooling Emergency Reduction
  Fund created within the CARES Act.




• $69 billion for vaccine procurement and distribution, together with
  $22 billion for states’ testing, tracing, and mitigation
  packages.

Monetary Providers

The invoice additionally comprises a number of provisions targeted on monetary
providers regulation.

• The laws modestly restricts the Federal Reserve’s
  Part 13(3) emergency lending authority to require congressional
  approval for the institution of sure lending amenities to
  states and municipalities and personal companies. The availability,
  which was sponsored by Senator Pat Toomey (R-PA), arose out of
  congressional debate over Treasury Secretary Steven Mnuchin’s
  current termination of the lending amenities established by the
  Federal Reserve that utilized CARES Act funding on the grounds that
  Congress meant within the CARES Act for the amenities to terminate
  on the finish of the yr.¹ Senator Toomey sought to make sure
  the termination of those amenities and stop their
  re-establishment with out congressional approval by together with
  language to that impact within the laws.

• The eviction moratorium issued by the Facilities for Illness
  Management and Prevention is prolonged by means of January 31, 2021.




• The CARES Act’s provisions offering reduction (1) from the
  Present Anticipated Credit score Losses (“CECL”) accounting
  requirements and (2) from Troubled Debt Restructurings
  (“TDR”) classifications are prolonged by means of January 1,
  2022.




• The CARES Act’s growth of entry to the Nationwide Credit score
  Union Administration’s Central Liquidity Facility
  (“CLF”) is prolonged by means of December 31, 2021.




• The Securities and Change Fee (“SEC”) is
  required conduct a research evaluating points affecting the supply
  of and reliance on funding analysis into small issuers. Inside
  180 days, the SEC should present a report back to Congress with
  suggestions to extend the demand for, quantity of, and high quality
  of funding analysis into these small issuers.




• The SEC can be required to review the ten % threshold
  restrict that applies to the definition of a diversified firm below
  part 5(b)(1) of the Funding Firm Act of 1940. The research
  should decide the impacts of such threshold limits on effectivity,
  competitors, capital formation, and investor safety, and a
  report should be issued inside 180 days containing findings,
  determinations, and any legislative suggestions.




• Federal banking regulators are required to offer Congress
  with an annual report detailing the measures they’ve undertaken
  to strengthen cybersecurity throughout the monetary providers sector
  and with respect to the capabilities of the regulator, together with the
  supervision and regulation of monetary establishments and relevant
  third-party service suppliers.




• The Director of Nationwide Intelligence is required to ascertain
  requirements for pupil mortgage compensation packages for workers of the
  intelligence neighborhood, and the accountable intelligence neighborhood
  leaders should report back to Congress when such requirements should not met for
  their divisions.

Tax

Moreover the brand new spherical of financial impression funds (mentioned
above), there are additionally numerous tax-related provisions within the
invoice, together with:

• An extension and growth of the Worker Retention Tax Credit score
  (“ERTC”), which was enacted within the CARES Act. This
  language:
  
  • Extends the ERTC by means of June 30, 2021.

  
  

  • Will increase the quantity of worker wages that may be included in
    the credit score calculation from a complete of $10,000 to $10,000 per
    calendar quarter.

  
  

  • Will increase the share of the credit score from 50% of certified
    wages to 70% of certified wages.

  
  

  • Permits a taxpayer to take a deduction on bills paid utilizing
    forgiven PPP loans.

• A major “tax extenders” package deal that extends
  and modifies a lot of expiring tax provisions. Just a few
  of those embody language to:
  
  • Make everlasting the credit score for power environment friendly industrial
    buildings (Sec. 179D) and index the credit score to inflation.

  
  

  • Make everlasting the credit score for sure railroad observe
    upkeep.

  
  

  • Make everlasting decreased excise taxes for sure beer, wine and
    distilled spirits.

  
  

  • Lengthen by means of 2025 the look-thru therapy for funds of
    royalties, curiosity and dividends between associated overseas
    companies (the “CFC look-thru rule”). This extension
    is for a number of years longer than Congress has usually prolonged
    this provision.

  
  

  • Lengthen the New Markets Tax Credit score and the Work Alternative Tax
    Credit score by means of 2025.

  
  

  • Lengthen the Oil Spill Legal responsibility Belief Fund and Part 45Q
    carbon seize and sequestration credit score by means of 2025.

  
  

  • Lengthen numerous different provisions by means of the tip of
    2021.

• Extensions of renewable power tax credit for wind initiatives,
  photo voltaic initiatives and carbon seize and sequestration initiatives and
  particular provisions addressing offshore wind farms. (Additional element
  is supplied in a
  separate Legal Update.)

• A provision to permit the total deduction of enterprise meal
  bills supplied by a restaurant by means of January 1, 2023.

The brand new expiration dates line up with main cliffs and adjustments
in tax provisions enacted as a part of the Tax Cuts and Jobs Act
(“TCJA”). For instance, the extensions by means of 2025 line
up with the expiration of most of the particular person tax provisions
enacted in TCJA, and the provisions that expire on the finish of 2021
line up with the beginning of the change within the curiosity calculation
from EBITDA to EBIT below Part 163(j).

Footnotes

1 The terminated amenities have been the Main Market
Company Credit score Facility, Secondary Market Company Credit score
Facility, Municipal Liquidity Facility, Primary Road Lending
Program, and Time period Asset-Backed Securities Mortgage Facility
(“TALF”).

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