On March 27, 2020, as a result of the coronavirus (COVID-19) the largest ever economic stimulus package was signed into law. It provides a massive amount of funding - $2 Trillion – to support the economy. Details about the law and its implementations are sketchy but are becoming clearer by the day. We will update this article with information as it becomes available.
Critically important to many small businesses which have been adversely affected by the coronavirus is the ability to obtain low interest loans.
Paycheck Protection Program. To meet this need the Stimulus Act has adopted the Paycheck Protection Program will be overseen by the SBA. It will provide loans for businesses with 500 or fewer employees. The loans will be administered by banks and other lenders. Small businesses can receive up to $10 million based on how much the business paid its employees between January 1, 2020 and February 29, 2020. Interest rates will be 4% or less. Loan approvals should be expedited. And if the business uses the loan funds for certain approved purposes and maintains the average size of its full-time workforce based on when it received the loan, the principal of the loan may be forgiven. This means that the business only needs to pay back the interest accrued until the funds have been utilized for the approved purposes.
More specific information is available on the Paycheck Protection Program at: https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses
Or, check out the SBA website www. sba.help and contact local bank.
The package also includes some key provisions to help employees who have been laid off work or are otherwise suffering consequences related to this virus including:
- One-time $1,200 direct payments to adults making up to $75,000 and $500 payment to minors.
- $350 billion forgivable loan program to ensure that small businesses do not lay off employees
- 50% refundable payroll tax credit up to $10,000 on worker wages for employers with less than 500 employees.
- Looser net operating loss deduction rules.
- Expanded unemployment insurance.
- Delay in Employer side payroll taxes for Social security until 2021 and 2022
- Sole proprietors and other self-employed workers could be eligible for expanded unemployment insurance benefits
There are many more provisions in this act and there will be future legislation coming soon.
Our firm will continue to keep you informed as new laws, new relief and new stimulus packages develop.
~ Mike Gianelli, Partner, Gianelli | Nielsen