The Federal government announced on Wednesday, March 25, 2020 a $2 trillion dollar rescue package to confront the coronavirus pandemic: the largest economic stimulus measure in modern history.

$349 billion dollars has been issued in the form of emergency loans to help bridge expenses.

What you need to know if you are a Small business (1-499 employees):

Tax payment Delay:

• Small businesses, sole proprietors and owners of pass-through businesses are granted the option to delay the employer portion of an employee’s tax payment.

Employee Retention Tax Credit:

• For businesses with 100 or fewer full-time employees, all employee wages qualify for the Employee retention tax credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10K of compensation, including health benefits, paid to an eligible employee.
• If your business (greater than 100 employees) was forced to close partially or fully due to coronavirus, you can also apply for the Employee retention tax credit which will pay 50% of wages to employees and up to $10K in compensation.

The fine print to the Employee retention tax credit:

• The tax credit will apply to all wages paid after March 12, 2020 and continue until December 31st, 2020.
• Eligibility for the loan will run through December 31, 2020.

Paycheck Protection Program:

• In addition, the bill guarantees every business a forgivable Paycheck Protection Program of up to $10 million to be used to cover payroll, salaries, mortgage or rent payments, utility payments, and pre-existing debt obligations to sustain a business of up to 2.5 months. Payroll to individuals within the business cannot exceed $100K/year. The loan forgiveness is only for up to 8 weeks of coverage.
• Portions of the loan can also be used to back pay employees or cover existing debt obligations from February 15, 2020.

The fine print to the Paycheck Protection Program:

• The loan application itself is also now available here and may be submitted starting Friday, April 3rd. Completed applications should be sent to your bank. We recommend you verify the terms and conditions with your bank.
  
  
• Your business must have been operational as on 2/15/2020 to apply.
• Loans will only be issued to businesses who keep 90% of their employees through September 30th, 2020 (forgiveness is scaled down as layoffs rise). In order to be eligible for the loan, your business must maintain an average monthly number of employees during the covered period that is no less than the number it had before the crisis began.
• Eligibility for the loan will run through December 31, 2020.
• Loans are made by lenders certified by the Small Business Administration (SBA) and guaranteed by the federal government. The SBA will administer the PPP.
• Sole proprietors, independent contractors, and self-employed individuals are also eligible for this loan.
• Note that under the CARES Act, “payroll costs” include vacation, parental, family, medical, and sick leave; allowances for dismissal or separation; payments for group health care benefits, including insurance premiums; and retirement benefits. 
• The Treasury Dept issued further information and guidance on the loan programs available to small businesses under the CARES Act Paycheck Protection Program. Download the fact sheet here.
  
  

Debt Relief for Existing and New SBA Borrowers:

Provide debt relief to small businesses with standard SBA 7(a), 504, or microloans. SBA will cover principal and interest payments for six months. 

The fine print to the CARES ACT Debt Relief:

• Existing loans prior to CARES act
• New loan within six months from signing CARES act
• May still apply for Paycheck Protection Program ( PPP)
• Debt relief cannot be applied to a PPP loan

Small businesses also qualify for the Emergency Economic Injury Loan & Grant ( EIDL):

• The stimulus a provision to provide an advance of $10,000 to small businesses that apply for an SBA economic injury disaster loan.
• This loan offers up to $2 million at 3.75% interest rate. 

The fine print to the EIDL:

• Must have been in operation on January 31, 2020
• Advances of $10,000 to small businesses that apply for an SBA EIDL
• EIDL grant does not need to be repaid even if the grantee is denied an EIDL
• No loan forgiveness feature
• EIDLs can be refinanced into PPPs (PPP’s forgive portion reduced by grant)
• Up to 30-year repayment period
• Application process: Through SBA, Available now through December 2020

What you need to know if you are a Mid-sized business (500-10K employees):

Tax payment delay:

• Mid-sized businesses are also granted the option to delay the employer portion of an employee’s tax payment.

The Employee retention tax credit:

• Under the Employee retention tax credit every business is 100% guaranteed support in the form of tax credits.
• If your business was forced to close partially or fully due to coronavirus, the Employee retention tax credit will refund your business 50% of wages in a calendar quarter.
• If because of coronavirus your business saw a 50% drop in revenue compared to this time last year, you will also qualify for a tax credit of up to $10K per employee.
• The deductible expense limit will increase from 30% to 50% for taxable income for 2019 and 2020.

The fine print to the Employee retention tax credit:

• The tax credit will apply to all wages paid after March 12, 2020 and continue until December 31st, 2020.
• Eligibility for the loan will run through December 31, 2020.

If you have a retail store regardless of the size of your company:

• If you have a storefront, the bill will protect you against evictions due to lack of rent payment.
• The bill will also protect your retail store from any fees or penalties as a result of delayed payments on your rent.

What this bill also means for your employees/contractors/part-time workers:

• If this loan wasn’t enough for you to keep your employees, the stimulus package does allow your former employees to receive benefits faster (without the 7-day waiting period). The bill also provides additional financial support above regular unemployment benefits. The exact amount,  however, varies by state and will stay continue for up to four months.
• If the employees’ adjusted gross income in 2019 (or 2018 if taxes were not filed in 2019) was less than $75K for single filers and $150K for joint filers, then a check for $1,200 will be issued within the next 3 weeks to taxpayers via direct deposit when possible. If not possible, checks will be mailed, but that is likely to take longer. Caveat: For every $100 your employee earned above $75K, the payment drops by $5. Those with an income above $99K would not qualify to receive a stimulus check payment. Also, those with children are eligible for additional funds.
• On March 18th, 2020 a separate $100 billion dollars bill was also passed to provide limited emergency paid sick and family leave for qualifying employees. 

Sources:

CNN Staff, “What's in the $2 trillion coronavirus stimulus bill”, CNN, March 26, 2020, https://www.cnn.com/2020/03/25/politics/stimulus-package-details-coronavirus/index.html

Tankersley, Jim, “A $2 Trillion Lifeline Will Help, but More May Be Needed”, NYT, March 25, 2020, https://www.nytimes.com/2020/03/25/business/2-trillion-stimulus-coronavirus-bill.html

Aratani, Lauren, “$1,200 stimulus checks for all? What to know about the US coronavirus bailout”, The Guardian, March 25, 2020, https://www.theguardian.com/world/2020/mar/23/coronavirus-us-bailout-what-you-need-to-know

Winston & Straw LLP, “Senate Passes SBA Paycheck Protection Loan Program”, Winston & Straw LLP, March 26, 2020, https://www.winston.com/en/thought-leadership/covid-19-senate-passes-sba-paycheck-protection-loan-program.html

Cohn, Michael, “Senate approves $2.2T coronavirus rescue package with tax breaks”, Accounting Today, March 26, 2020, https://www.accountingtoday.com/news/senate-approves-2-2t-coronavirus-rescue-package-with-tax-breaks

DUBROW, DAVID L., Krainin, Richard, McLaughlin Jeannette Carneiro, Goldberg, Justin A., “Summarizing the Paycheck Protection Program”, Arent Fox, March 27, 2020, https://arentfox.com/perspectives/alerts/summarizing-the-paycheck-protection-program

CREDIT SUISSE GROUP, “Washington Alert: Bipartisan Agreement Reached on $2 Trillion Stimulus Bill”, CREDIT SUISSE, March 25, 2020

https://eig.org/news/understanding-the-paycheck-protection-program