Coronavirus stimulus package
By Dan Karpiel
Late last week the United States Congress passed, and President Donald Trump signed into law, the Coronavirus Aid, Relief and Economic Security (CARES) Act. Often called the “Coronavirus stimulus” or some similar variant, the law provides for more than $2 trillion in aid and relief for individuals, families, and businesses. Below is a rundown of the basics of the various programs.
Assistance for families and individuals
Many Americans will receive a stimulus check from the federal government as a result of the CARES Act. If one has already filed their taxes for 2019, the amount received will be based upon the income earned last year. For those who have yet to file, the determination as to the payout will be based on one’s 2018 tax return. Those who collect Social Security income are entitled to receive funds under the provisions of the bill.
All individuals whose most recent tax return shows an adjusted gross income (AGI) of below $75,000 will receive $1,200. Married couples with an AGI below $150,000 will receive $2,400. For people who file as the head of a household with dependent children will receive $500 per child in addition to the $1,200 they receive as an individual. Thus, for a married couple with two children who have an AGI below $150,000, the payout will be $3,400.
There is a “step-down” process for those earning more than the aforementioned income thresholds. The payouts are reduced in increments of 5% for every dollar above the threshold, or by $50 for every $1,000 earned above the AGI ceilings. The payouts drop to zero for individuals earning above $99,000 and for married couples earning above $198,000.
If one has received a tax rebate on their last tax return and received it via direct deposit, the stimulus funds will be dispersed in the same manner, to the same bank account. For those who received their tax refund via a check sent through the mail, their stimulus check will be sent the same way, to the same address. Within 15 days of the disbursement of the funds, taxpayers should receive a letter from the IRS informing of the amount they should have received and the method by which it was dispersed; there is will also be a phone number provided should someone not receive their check.
Help for small businesses
For small-business owners, the CARES Act provides two separate steams of assistance packages. Businesses qualified for the system include any small business with 500 employees or fewer, sole proprietorships, independent contracts, the self-employed, gig workers and certain 501 (c) (3) nonprofits. To be eligible, businesses must have been in operation as of Feb. 15, 2020. The Small Business Administration (SBA) is responsible for overseeing the programs.
The Payroll Protection Program (PPP) is a $350 billion loan program that provides cashflow assistance through federally guaranteed loans. The purpose of this program is to help employers maintain payroll to help get their employees through this difficult time and provide the business a better starting off point when things return to normal.
The funds can be used for employee compensation including wages, salaries, commissions, tips or equivalents; vacation, parental or family, medical or sick leave; payments for group health care benefits, retirement benefits and payroll taxes; interest on mortgage obligations, rent, utilities and interest on other preexisting debt obligations.
The size of the loan is capped at $10 million and is calculated to be 250% of an employer’s average monthly payroll cost from Feb. 15, 2019, through June 15, 2019. If payroll is maintained by the employer(s) for the duration of the disruption to business, and 75% or greater of the amount is used for payroll costs, the loans will be forgiven. All current 7(a) lenders are eligible to process the loan and the U.S. Treasury Department is currently in the process of authorizing additional lenders to help expedite the process.
The other program available under the CARES Act is the Economic Injury Disaster Loan (EIDL) which is a low-interest, fixed-rate loan that can provide up to $2 million in assistance for small businesses to meet immediate expenses during this emergency. The same type of small businesses are eligible for this program as with the PPP. Eligible applicants may request $10,000 in immediate assistance which need not be repaid. EIDL borrowers may also apply for the PPP but, when determining loan forgiveness under that program, the advance EIDL grant is taken into consideration. For a business to qualify for the $10,000 immediate advance, they must first apply for the EIDL before requesting the advance.
Further information on these and other programs available for small businesses can be found at www.sba.gov.
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