Businesses are receiving a lot of support and funding opportunities from the Federal government. To navigate your options as a small business, it is essential to understand the implications of each relevant piece of legislation. In response to COVID-19, three pieces of legislation were signed into law this month. Referred to as Phase 1, 2 and 3, they each address a different facet of the pandemic.
PHASE ONE – The “Coronavirus Preparedness and Response Supplemental Appropriation Act of 2020” is an $8.3 billion package. It is primarily aimed at providing funding for the medical field and supporting research for the treatment of COVID-19. Phase one also includes $1 billion for the Small Business Administration (SBA). While the SBA Disaster Loan Program was already in existence, phase one expanded the funding available for loans in anticipation of increased demand. benefits. In Texas, the standard 13 weeks of payments of $325 was expanded to 25 weeks at $925 per week, and the one-week waiting period was waived.
The CARES Act also establishes Paycheck Protection Program (PPP) Loans to employers for payroll, benefits and other necessary expenses, including rent and utilities. Employers may apply for up to 2.5 times their monthly payroll expense for up to a maximum of $10 million. Funds used to keep employees on the payroll could potentially be forgiven, but funds not used
PHASE TWO – The “Families First Coronavirus Response Act” (FFCRA) covers businesses with fewer than 500 employees. Phase two mandates that employees receive two weeks of paid sick leave if they have the coronavirus or are required to quarantine. It mandates up to 10 weeks of paid family leave at two-thirds of the normal wage to care for family members affected by COVID-19 and to care for children if schools and daycare centers close. Employers are reimbursed through relief from submitting payroll taxes. Employers with fewer than 50 employees could potentially be exempt. To qualify, they would need to demonstrate that their business would close it was required to comply.
PHASE THREE – The Coronavirus Aid, Relief and Economic Security Act (CARES) authorized direct payments to most American citizens of $1200 per adult and $500 per child. The CARES Act expanded unemployment insurance by an extra 12 weeks and added $600 per week on top of the state’s maximum unemployment payment while eliminating any waiting period to receive for covered payroll expenses will have to be repaid.
Interest for PPP loans is 4% and the maximum term is ten years, and they will be made available by local banks and credit unions, which are SBA lenders. Interest rates for small businesses will be 3.75%, for 501(C)(3) non-profits 2.75%, and maximum terms will be 30 years.
The CARES Act added $10 billion for emergency grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs. These are administered through the Small Business Administration.
In addition to loans and grants, there are also some additional tax benefits for employers included in the bill.
A phase four bill is under discussion. Unlike phase three, which passed the House on a voice vote and the Senate with a vast bi-partisan majority, phase four seems headed for partisan problems. Both the President and the Speaker of the House are talking about infrastructure and significant amounts of money, while the Senate Majority leader is suggesting we need to find a way to pay for future relief.
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