What Congress' stimulus package would mean to local business
The $2 trillion economic rescue package approved by the U.S. Senate late Wednesday night includes a number of provisions and aid for businesses struggling to maintain normalcy during the COVID-19 pandemic.
The bill -- the largest economic recovery package in U.S. history -- is expected to be approved by the House today, and President Donald Trump is expected to sign it into law immediately.
The U.S. Chamber of Commerce, in a message sent to its members Thursday, summarized the contents of the Senate package's programs and provisions that local businesses owners could have the opportunity to take advantage of. Below is a synopsis of the chamber's message, as it pertains to local businesses:
'Paycheck Protection Program'
The bill creates a new $349 billion lending program, modeled on existing SBA 7(a) program, with a 100% government guarantee, as opposed to 75% guarantee for 7(a) loans.
Eligible businesses include:
• Small businesses as defined by SBA size standards, which is generally up to 500 employees, but up to 1,500 employees depending on the sector and certain sectors are based on revenue.
• Businesses in the accommodation and food services sectors are eligible with up to 500 employees at each location.
• 501 (c) (3) nonprofits with fewer than 500 employees.
• Sole proprietors, the self-employed, and independent contractors.
The program streamlines regulations by waiving the SBA's standard "no credit elsewhere" test. All lenders -- non-SBA lenders will need to be approved by the Treasury Department and SBA -- can provide loans, and no personal guarantee or collateral is required. Lenders will defer fees, principal, and interest for no less than 6 months and no more than 1 year.
The maximum will generally cover monthly payroll costs for 2½ months, not to exceed $10 million. Payroll costs exclude compensation paid to individuals, including the self-employed, above $100,000 a year.
The employer must certify the loan will be used to retain workers, maintain payroll, make mortgage or lease payments, and pay utilities. Borrowers shall have a portion of their loan forgiven in the amount equal to their payroll costs (not including costs for compensation above $100,000 annually), interest payments on mortgages, rent payments, and utility payments between February 15 and June 30, 2020. Loan forgiveness will be reduced if the borrower reduces employment by a ratio similar to their reduction in employment or if borrower reduces salaries and wages by more than 25%.
Changes to SBA's Disaster Loans
• Loans can be made based solely on credit scores.
• Loans are available to all nonprofits, including 501 (c) (6)s.
• Loans below $200,000 can be approved without a personal guarantee.
• Borrowers can receive $10,000 cash advances that are forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments, or repaying obligations that cannot be met due to revenue losses.
Business tax provisions
• An employee retention credit for employers subject to closure due to COVID-19, giving a refundable 50% tax credit applicable to the employer's share of payroll taxes on wages up to $10,000 per employee; is available with special rules for small employers.
• A delay of payment of employer payroll taxes, which defers payment of the employer share of the Social Security tax between now and Jan. 1, 2021 to Dec. 31, 2021, (50% due) and Dec. 31, 2020 (remaining due).
• Modifications for net operating losses. For 2018, 2019, 2020, losses can be carried back 5 years, and temporarily suspends 80% limitation; it also extends to pass-throughs, sole proprietors.
• Accelerates ability of companies to recover AMT credits.
• Modification of limitation on business interest for 2019, 2020, which increases the 30% limit to 50%.
• A temporary exception from the excise tax for alcohol used to produce hand sanitizer for 2020.
Pension and employee benefits
• The Department of Labor will be allowed to delay employee benefit related deadlines because of a public health emergency the same as declared national disasters or terroristic military actions.
• A delay is also approved in required minimum pension contributions due in 2020 until Jan. 1, 2021 (plus interest).
• Unemployment insurance is extended by 13 weeks and includes a four-month enhancement of benefits.
• Unemployment compensation is available for those not eligible for regular UI, including those who may have exhausted benefits.
• An individual must provide certification that he or she is able and available to work, but is unemployed or underemployed due to a coronavirus diagnosis or presentation of symptoms and seeking medical attention; a household member with coronavirus diagnosis; caring for a family member who has been diagnosed; school or day care closures and the individual is the primary child caregiver; workplace lockdown; advice from a health care provider to self-quarantine; if the individual was about to start a job that is no longer available because of coronavirus; if the individual is now the breadwinner of a household because someone has died from coronavirus; if the individual had to quit because of a circumstance resulting from coronavirus; or if the individual's place of work is closed because of coronavirus.
The provisions do not apply to an individual who can telework with pay, or cover someone getting paid sick or paid family leave. The unemployment provisions run from Jan. 27 to Dec. 31.
• Receipt of assistance under the unemployment provisions shall not exceed 39 weeks unless otherwise extended.
• No one-week waiting period.
• The federal government will pick up 100% of the cost.
• Upon agreement between a state, an additional $600 per worker per week unemployment compensation payment is available, 100% covered by the federal government. The additional payment sunsets on July 31.
• The federal government will pick up the cost for any states that waive the one-week waiting period, which sunsets on Dec. 31.
Paid leave changes
Changes to the "Phase 2" Bill that was just enacted include:
• Paid FMLA leave under FFCRA is capped at $200 per day and $10,000 in aggregate.
• Paid sick leave under the FFCRA is capped at $511 per day and $5,110 in aggregate; and drops to $200 per day and $2000 in aggregate for sick leave taken to care for a family member or because of a school closure.
• Workers who are laid off after March 1 but then rehired are eligible for paid FMLA leave.
• Employers can keep money they would have deposited for payroll taxes in anticipation of refunds from the Treasury for paid sick and paid FMLA leave provided to employees, including amounts that would have been refunded.
Health care items
• Repeals the requirement that over-the-counter medical and health items previously deemed to be qualified medical expenses must be prescribed by a physician in order for tax preferred funds to be used when purchasing them.
• Provides $75 billion to ensure health care providers continue to receive the support they need for COVID-19 related expenses and lost revenue.
• Appropriates not less than $500 million to provide preparedness support to facilities around the country. $200 million of which will be provided within 30 days.
• Requires the coverage under Medicare Part B of COVID-19 vaccine and its administration without any cost-sharing.
• Requires Medicare Part D plans and MA-PD plans to permit eligible individuals to obtain a single fill or refill at the option of the individual a total day supply, not to exceed a 90-day supply for a covered Part D drug.
• Expands the Medicare accelerated payment program to 100% for hospitals during the emergency period and extends the period to 6 months.
• Requires all comprehensive private health insurance plans reimburse the test provider based on the rate negotiated between the plan and the provider. If there is no negotiated rate between the plan and provider (i.e., the provider is out-of-network), the plan would fully reimburse the provider based on the provider's own "cash price" which must be publicly available (listed on a public website). Providers who fail to make their price public could face a civil monetary penalty of up to $300 per day from the Department of Health and Human Services.
• Ensures that access to testing and a coronavirus vaccine (once one is developed) would be quickly covered without cost-sharing on a permanent basis as a preventive service.
State and local aid
The package provides $150 billion to states and local government based on each state's population for the purpose of funding unforeseen expenses related to COVID-19. It also provides $340 billion in new federal spending for Fiscal Year 2020 -- 80% of which goes to state and local governments and communities and includes:
• $1.5 billion for the Economic Development Administration, funding to support economic development grants for states and communities suffering economic injury as a result of the coronavirus.
• $50 million for the Manufacturing Extension Partnership, funding included to be distributed among the 51 MEP centers to help small and medium sized manufacturers recover from the economic impacts of the coronavirus.
• $6 million for the National Institute of Standards and Technology, funding to support continuity of operations during the coronavirus pandemic, including research and measurement science activities to improve c oronavirus testing capabilities and support development of coronavirus diagnostics.
• $10 million for the National Institute for Innovation in Manufacturing Biopharmaceuticals, funding for NIMBL to improve national readiness and domestic biopharmaceutical manufacturing capability.
• $562 million for the Small Business Administration (SBA), additional funding for administrative expenses and program subsidy for the SBA's Disaster Loans Program.
• $9.1 million for the Cybersecurity and Infrastructure Agency, funding to address immediate needs for improved interagency coordination for the protection of critical infrastructure worldwide.