The White House and Senate leaders reached agreement on an estimated $2 trillion coronavirus record stimulus plan earlier this week. On Wednesday the Senate approved an 880-page bill – the Coronavirus Aid, Relief, and Economic Security (CARES) Act – that now goes to the House where it is expected to be voted on Friday.

While we need to be careful since we are dealing with legislation which has not been all the way through Congress and signed by the President, at this time its goal is to provide direct payments to many Americans, expand unemployment insurance, offer loans for small and large businesses, and provide additional resources to an overwhelmed health care industry.

The items that directly affect business owners and their employees include:

  • One-time checks of $1,200 for people making up to $75,000 a year and $2,400 for couples making up to $150,000 a year. There is also an additional $500 per child. Individuals with little or no tax liability would receive the same amount. Payments would decrease for those making more than those amounts with an income cap of $99,000 for individuals and $198,000 for couples.
  • A broad expansion in unemployment benefits, which would extend to gig workers, and other self-employed workers who typically would not qualify. It would also increase current unemployment assistance by $600 a week for four months.
  • Creation of an employee retention tax credit to incentivize businesses to keep workers on the payroll equal to 50% of wages paid from March 13, 2020 to December 31, 2020 for employers whose operations were fully or partially suspended due to COVID-19 shutdown orders.
  • An estimated $350 billion in assistance for small businesses in an effort to avoid mass layoffs of workers. This included loans from FDIC lenders with no personal guarantees or collateral and with certain limits but based on 2.5 times payroll. They can be used for items such as payroll, rent, mortgage payments, and utilities. This potentially includes grants and loan forgiveness if certain employee retainage goals are met. The loan forgiveness is not taxable income.
  • Waives penalties on certain virus-related early withdrawals and eases required minimum distributions from some retirement accounts.
  • Postpones business payments of the Social Security match until 2021 and 2022.
  • Reduces the depreciable life of qualified improvement property from 39 to 15 years thus making it eligible for bonus depreciation retroactive to January 1, 2018.

Other stimulus items in the current bill:

  • An estimated $500 billion in corporate aid. The Treasury Secretary will have authority to make direct loans from a portion of these funds, with oversight from a newly-created inspector general and oversight board.
  • A ban on stock buybacks for companies receiving a government loan from the stimulus package that would last the term of the government assistance plus one year.
  • An estimated $130 billion investment in the health care system.
  • An estimated $150 billion in stimulus funds for state and local governments slammed with ever increasing coronavirus-related costs.
  • An estimated $55 billion in emergency education and transit funding.

While the final provisions of the bill are still under discussion, these are some of the major features. As with any major program, the actual effects on any particular person, company or situation is not known until the bill becomes law and the related rules and regulations are released.

We will continue to provide updates as other COVID-19 related developments emerge. We are also regularly updating our new COVID-19 Resource Center. If you have any questions about these or any other matters, please contact your DunlapSLK professional team.