March 26, 2020 at 3:46 PM
The U.S. Senate on March 25 passed a $2 trillion disaster relief and economic stimulus plan to help combat the effects of COVID-19, called the CARES Act. It now moves to the House of Representatives, where a vote is expected March 27. President Trump already has indicated his intention to sign the legislation.
While the legislation itself is 800+ pages, below are some of the details that are included in the proposal:
$350 billion is dedicated to preventing layoffs and closing of businesses.Companies with 500 employees or less that keep paychecks steady could get up to $10 million each in forgivable small business loans.
Federally guaranteed loans will provide eight weeks of assistance for qualifying employers who maintain payroll.
Those who meet requirements would have costs such as utilities, mortgage interest and rent forgiven.
Payroll taxes that would normally go towards social security would be deferred (6.2% of the employer_s share).Those deferrals must be paid in full, with half due at the end of 2021 and the other half at the end of 2022.
A new Paycheck Protection Loan program is created through the Small Business Administration (SBA):Businesses can use the loan for payroll costs, mortgage interest, rent and utilities over an eight-week period.
Businesses can get these loans forgiven if they maintain payroll from February 15, 2020 through June 15, 2020.
The program applies to businesses with less than 500 employees, sole proprietors, independent contractors and self-employed individuals. Many in the food and hospitality industry may qualify if they have more than 500 employees with multiple locations.
All borrower and lender fees are waived, amongst other requirements and there is an automatic deferral of principal, interest and fees for six months.
Important note: A small business cannot get a new loan under this program if they receive an SBA Economic Injury Disaster Loan.
Individuals will be eligible to receive:$1,200 per individual making less than $75K in 2019 with complete phase out above $99K.
$2,400 per couple making less than $150K in 2019 with complete phase out at $198,000 for joint filers with no children.
$500 per child with income phase out.
Unemployment benefits for displaced employees will be expanded to up to 100% of benefits, which ensures laid-off workers, on average, will receive their full pay for four months. It also allows furloughed workers to stay on as employees, so that when the crisis ends they can quickly resume work.
No penalty will be assessed for withdrawing from retirement accounts related to COVID-19 up to $100,000.
Around $100 billion is allocated to hospitals and the health care system to help mitigate the spread and impacts of COVID-19.
Here are a few helpful links:
- Small business portion of CARES Act
- Tax provisions in the CARES Act
- Distressed industries provision of CARES Act
- U.S. Chamber of Commerce full overview of CARES Act
For more information on the Senate CARES bill, click HERE.