The US Senate passed bipartisan legislation last night to provide emergency relief to workers, families, small businesses and distressed industries. The Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) now moves to the US House where it is expected to see swift action.
Here are the details of the CARES Act according to an analysis by the House Ways and Means Committee:
- Includes $250 billion to Expand Unemployment Benefits: Provides economic relief and support for workers by making a significant investment in unemployment benefits.
- Unemployment Benefits for More Americans: Makes sure self-employed and independent contractors can receive unemployment during the public health emergency. The bill also includes support to state and local governments and nonprofits so they can pay unemployment to their employees.
- More Money for a Longer Period for More Workers: Makes benefits more generous by adding a $600/week across-the-board payment increase through the end of July. In addition, for those who need it, the bill provides an additional 13 weeks of benefits beyond what states typically allow.
- Temporary Provisions: The expansion in unemployment benefits expires at the end of 2020..
- Includes Tax Rebate Checks - The Senate bill also includes a one-time tax rebate check of $1,200 per individual and $500 per child for those with a valid social security number. There are no earned income or tax liability requirements to receive these rebate checks. The full rebate amount is available for those with incomes at or below $75,000 for individuals, $112,500 for head of household, and $150,000 for married couples.
- Provides Another Option for Employers to Keep Connected to Their Employees. Employers of all sizes that face closure orders or suffer economic hardship due to the coronavirus crisis that continue to pay employees that are furloughed may be eligible for a 50% credit on up to $10,000 of wages paid to those employees. This will help workers keep their jobs, help local businesses ride out this storm, and ensure that furloughed workers have jobs to return to.
- Delays Payroll Tax Payments for Employers: Employers would be able to delay the payment of their 2020 payroll taxes until 2021 and 2022, leading to approximately $300 billion of extra cash flow for businesses.
- Restores Supports for Businesses Suffering Losses: The bill also allows businesses to carry back losses from 2018, 2019, and 2020 to the previous 5 years, which will allow businesses access to immediate tax refunds.
Small Businesses –
- Paycheck Protection/Forgiveness For Small Business Loans for Keeping Employees: The bill creates a “paycheck protection program” for small employers, self-employed individuals, and “gig economy” workers, with $350 billion to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic. The “Paycheck Protection Program” would provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis. This proposal would be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.
- Small Business Contractors Also Get Protection: Federal agencies would be required to extend contract performance periods and promptly play small business contractors Small business contractors impacted by COVID-19.
- Debt Relief: For six months, SBA is required to pay all principal, interest and fees on all existing SBA loan products including 7(a), Community Advantage, 504, and Microloan programs for six months.
Distressed Industries -
- Federal Tools to Provide Liquidity: $425 billion for loans, loan guarantees, and investments in support of facilities established by the Fed under 13(3) authority for purpose of providing liquidity to businesses, states, or municipalities through purchasing obligations or other interests directly from issuers of such obligations or other interests.
- Loans for Major Industry: Direct lending to the following: $50 billion for passenger airlines, $8 billion for cargo airlines, and $17 billion for businesses critical to “maintaining national security.”
The Chamber will continue to keep its members updated on the bill and provide a full analysis when the bill is signed. Please note that we are still unclear as to the date this bill would take effect.