COVID19 – Coronavirus Aid Package
A word from our friends at Arline & Wiggins
Coronavirus (COVID-19) Aid Package
March 27, 2020
To our clients and friends,
As the world struggles to contain the spread of COVID-19 and precautionary measures are implemented to protect our public, people are understandably concerned about their financial health as well. The economic impact of the coronavirus is felt everywhere, from the cancellation of social events, travel plans, and schools to the closing of beaches, parks, and businesses.
We are all affected by this pandemic, and we at Arline & Wiggins are receiving calls, emails, and texts from our friends and clients who are unsure of how to navigate through all the information coming at them from so many different sources.
We continue to monitor the constantly evolving situation to provide you with the most accurate, relevant, and up-to-date information that is available.
At the time of this writing, our Senate has passed the roughly $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to further assist in the ongoing COVID-19 crisis. The U.S. House of Representatives and the President still need to approve the legislation before it can go into effect, but each was involved in the negotiations that produced the final Senate bill. The House is expected to approve this legislation today.
The CARES Act is the third aid package from Congress and is meant to keep businesses and individuals afloat during an unprecedented halt on the majority of American life. The first emergency aid package signed into law earlier this month allocated roughly $8 billion for coronavirus prevention, preparation, and response efforts. The second aid package, named the Families First Coronavirus Response Act (FFCRA), includes provisions for paid sick leave, free testing, and expanded unemployment benefits and was signed into law by President Trump on March 18, 2020.
The CARES Act is the latest phase in emergency relief and addresses the wide-ranging impact of shutting down most of the country to help slow the spread of the coronavirus. Here is what individuals and businesses can expect if this bill becomes law:
Coronavirus Aid, Relief, and Economic Security Act (CARES Act) – pending final approval, some figures are based on congressional estimates
- Direct cash payments for families – estimated to total $300 billion
- Individuals earning less than $75,000 would receive a one-time cash payment of $1,200, checks start to phase-out over this threshold and disappear completely for people making more than $99,000
- Married couples filing jointly earning less than $150,000 would receive $2,400, checks start to phase-out over this threshold and disappear completely for people making more than $198,000
- Families would get $500 per child
- Payments are based on either your 2018 or 2019 tax filings
- People receiving Social Security benefits but don’t file a tax return would still be eligible
- Expanded unemployment benefits – estimated to total $260 billion
- Makes it easier for people who lost their jobs due to coronavirus-related circumstances to qualify for benefits
- Would also make them eligible for an additional $600 per week on top of what they would already qualify for in unemployment benefits from the state
- Benefits will be payable in arrears to staff already laid off or furloughed (retroactive to January 27, 2020)
- Available to self-employed, independent contractors, freelancers, and “gig” workers
- Allows small businesses to retain staff while they are closed and no revenue is coming in to pay them
- Includes individual tax relief by extending individual tax filing and payments to July 15, 2020, and postpones all 2020 estimated tax payments until October 15, 2020 (currently, only the first estimated tax payments due April 15, 2020 are extended until July 15, 2020)
- Required minimum distributions (RMDs) would not be required for calendar year 2020
For Small Businesses
- Emergency grants and forgivable loan programs for companies with 500 or fewer employees (please remember these loans are not yet available so you cannot apply for them)
- $350 billion allocated for Paycheck Protection Program (PPP)
- Provided by the Small Business Administration (SBA)
- Covered period for receiving a loan is February 15 to June 30, 2020
- Maximum loan would be 2.5 times the trailing 12-month average of your payroll and payroll related expenses, including health and retirement benefits
- Limited to compensation of employees (including the owners) up to a maximum amount of $100,000 per employee
- Loans have a forgiveness nature that begins on the date the loan originates, if the proceeds are used within 8 weeks for qualified expenses
- Qualified expenses include payroll, interest payments on mortgages, rent, utilities, and interest on other business debt obligations
- Forgiveness of the loan is still possible even if you have laid-off employees, as long as you re-hire the same number of full-time employees, at their full rate, by June 30, 2020
- Economic Injury Disaster Loan (EIDL) – $10 billion cap
- Provided by the Small Business Administration (SBA)
- Emergency grant up to $10,000, which the SBA must distribute within three days
- Used to cover immediate operating costs
- Most likely, these loans would not have to be repaid
- Relief for existing SBA loans – $17 billion cap
- Used to cover six months of payments for small businesses already using SBA loans
- Deferral of payment of employer payroll taxes for the rest of the year, with payback over two years
The Act also provides relief to big corporations, hospitals and public health, education, and state and local governments. The bill is almost 900 pages and covers a wide range of topics that we will continue to review.
Remember, the CARES Act has not been approved at this time by the House of Representatives or the President, but we felt it necessary to communicate with you on what the Act will offer to help you through this difficult time. We will update you on this information when it becomes available and provide guidance on how to apply for the help you need. We hope that you, your families, and your teams stay safe and well.
Joel & Jenny