Ward Law LLC is dedicated to keeping our clients informed about all things COVID-19 related. Our business is to ensure that you have all the information you need to keep your business going. In that regard, please read below for updates on the $2.2 Trillion Coronavirus Aid Package signed into law.
On Friday, March 27, 2020, President Donald J. Trump signed a $2.2 trillion stimulus package into law, hours after Congress passed the unprecedented response to the COVID-19 pandemic. The $2 trillion bill is intended to speed relief across the United States and to catalyze the lagging and declining economy. The largest relief package in U.S. history is intended to prop up businesses negatively affected by the virus so that a large percentage of employees can continue working until things return to business as usual.
The most widely publicized and criticized portion of the stimulus package includes government cash payments totaling $300 billion to most Americans. Individuals earning $75,000 or less per year can expect a one-time payment of $1,200, and married couples earning $150,000 or less will receive $2,400. Individuals and married couples earning in excess of these figures will receive a phased-down payment. Reduced checks will go out to individuals making up to $99,000 a year (the payment amount falls by $5 for every $100 in income above $75,000), and reduced checks, on a sliding scale, will go out to married couples who earn up to $198,000. Married couples also will receive an additional $500 for every child under 17. Income used for individuals and married couples is based upon adjusted gross income listed on 2019 tax returns or, if 2019 returns have not yet been filed, 2018 returns. Use this calculator to see how much you will receive.
In addition to government cash payments, the stimulus package represents an unprecedented expansion of unemployment benefits. Many businesses have been forced to lay off or terminate employees while they navigate forced shutdowns or significant downturns in business due to the virus. The federal government is offering an additional $600 per week for 4 months in unemployment compensation on top of the worker’s state benefits.
For small businesses, which are those with fewer than 500 employees, a key piece of the relief bill is more than $370 billion in funding for loans and emergency grants. There is an allocation of $10 billion intended to provide grants of up to $10,000 of emergency funds to cover immediate operating costs. Business loans of up to $10 million per business are available for those who qualify. Importantly, the principal on those loans is forgiven in circumstances where the loan is used to maintain payroll, keep workers on the books or pay for rent, mortgage and existing debt, provided that the business maintains the average size of its full-time workforce based on when it received the loan. In other words, businesses must retain their workforce or hire back those employees that have already been let go in order to qualify. Finally, the bill sets aside $17 billion to cover 6 months of payments on existing small business administration loans.
The Small Business Administration (“S.B.A.”) will oversee the small business loans under the program. In an effort to expedite the process, the loans will be administered by banks and other lenders. Under the bill’s lending program, individual lenders will be able to use their own paperwork to process loans and can expect S.B.A. approval within 2 weeks. Banks will not disburse the loans until the S.B.A. assures them that each is fully guaranteed against default. Unlike other S.B.A.-backed loans, business owners won’t have to provide personal guarantees or use their available assets as collateral. There are no fees, and interest rates are capped at 4%. The U.S. Treasury Department will repay the banks and lending institutions supplying the loans. Larger businesses also will have access to business loans under the stimulus. However, those businesses will be required to pay back those loans and will be subject to public disclosures and other requirements.
Other noteworthy benefits offered to all businesses include a 50% refundable payroll tax credit on worker wages to incentivize businesses to retain employees, looser net operating loss-reduction rules, and a delay in employer-side payroll taxes for Social Security until 2021 and 2022.
The question that will remain for a time is whether this will be enough to stave off a tremendous economic disaster and allow businesses, particularly small businesses, to remain afloat until the curve of this outbreak can be flattened.
If you have any questions about the $2.2 Trillion Coronavirus Aid Package, please contact a Ward Law attorney at any time.