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Legislative Analysis: COVID-19 Stimulus Package


Legislative Analysis: COVID-19 Stimulus Package

Earlier this week, the U.S. Senate unanimously approved the Coronavirus Aid, Relief, and Economic Security (CARES) Act (H.R. 748) to provide relief for all Americans and the business community in response to the COVID-19 outbreak. The House of Representatives is expected to pass the legislation later today. Please see below for a summary of the most important components of the legislation. A more detailed summary can be found here.

Business Provisions

  • Small businesses
  • $349B for the “Paycheck Protection Program” to directly assist small businesses, self-employed individuals, and independent contractors.
  • Businesses can receive a loan equal to 2.5 times their average monthly payroll (up to $10M).
  • Applies to businesses with fewer than 500 employees (or applicable Small Business Administration (SBA) size standards).
  • Employers that maintain payroll will have the portion of the loan used for payroll costs, interest on mortgage obligations, rent, and utilities forgiven.
  • Retroactive to February 15 and extends to June 30, 2020.
  • 501(c)3 organizations are eligible for assistance through this program; however, 501(c)6 organizations are not.
  • $17B for the SBA to pay principal, interest, and fees on all existing SBA loan products (7(a), Community Advantage, 504, and Microloan programs) for six months.
  • General business community
  • $500B to Treasury’s Exchange Stabilization Fund for emergency relief.
  • $454B for loans and loan guarantees in support of facilities established by the Fed under 13(3) authority to provide liquidity to businesses, states, and municipalities.
  • $17B set aside in loans and loan guarantees for businesses important to “maintaining national security.”
  • The duration of loans and loan guarantees cannot exceed five years.

Labor Provisions

  • Increases the maximum unemployment benefit by $600/week (in addition to what states pay) through July 2020.
  • Includes individuals who are part-time and independent contractors (“gig workers”).
  • Extends UI by 13 weeks beyond what states typically allow.

Tax Provisions

  • Employers (regardless of size) that continue paying employees who are furloughed may be eligible for a 50% refundable payroll tax credit on up to $10,000 of wages paid to those employees, known as the “employee retention tax credit".
  • Businesses that file for the employee retention tax credit are not eligible to receive SBA loan assistance via the “Paycheck Protection Program.”
  • Employers can delay the payment of their 2020 payroll taxes until 2021 and 2022.

Health Care Provisions

  • +$140B for the national health care system.
  • $100B for a new grant fund for hospitals, public entities, and nonprofit entities to cover unreimbursed health care related expenses or lost revenues from the COVID-19 outbreak.
  • $16B for the Strategic National Stockpile to procure medical supplies for federal and state response efforts.
  • $11B for R&D of vaccines and diagnostics to address COVID-19.
  • $4.3B for the Centers for Disease Control.
  • $185M for rural health programs (hospitals and telehealth programs).

Individual Provisions

  • Establishes a one-time tax rebate check of $1,200 per individual(s) with an adjusted gross income of ≤$75,000 for single filers and ≤$150,000 for joint filers, with an additional $500 per child.
  • Rebate checks would phase down for individuals above those salary thresholds and would phase out for single filers earning above $99,000 and joint filers with no children earning above $198,000.
  • Waives the 10% penalty for early distributions from 401(k)s and IRAs made at any time during 2020.

Government Provisions

  • $150B for state and local governments, with an $8B set aside for local governments.
  • Each state would receive a minimum of $1.25B.

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