Dear friends and neighbors,
Last Friday, the Federal government enacted the CARES Act – a $2.2 trillion stimulus program to mitigate the economic impact of COVID-19. As we all know, a large part of our economy has come to standstill because of containment measures enacted at the state and federal level. A large number of people have lost their jobs and many businesses are truly hurting.
There are three ways this stimulus package will help individuals and businesses.
1) Payroll Protection Program
This act makes available, to all small businesses with less than 500 employees, loans equal to two-and-a-half months-worth of their payroll. Such loans are available to the self-employed, sole-proprietors, and independent contractors as well. Most or all of these loans will be forgiven and do not need to be repaid if the business does not resort to employee layoffs. These loans will be made by local banks and guaranteed by the Small Business Administration (SBA). Most banks will have the required paperwork and processes finalized by the end of this week. No personal guarantee will be required. For small business owners and self-employed individuals, this will minimize the economic impact of COVID-19. The Act provides $350 billion for this program for the purpose of making these loans available.
The U.S. Chamber of Commerce has created a loan guide: Click Here
DECD has also prepared a document to explain the CARES Act: Click Here
2) Expansion of Unemployment Insurance
This act expands unemployment insurance in three different ways.
It provides Pandemic Unemployment Assistance (PUA) through December, 2020 for those who are not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others). The state’s Department of Labor is adjusting their system to allow for the processing of these claims.
It provides an additional $600 per week in payments to each recipient of unemployment insurance or PAU for up to four months.
It provides an additional 13 weeks of unemployment benefits through December 31st, 2020 to help those who remain unemployed after state unemployment benefits are no longer available.
3) Recovery Rebates/Direct Checks to Individuals and Families
All U.S. residents with adjusted gross income up to $75,000 ($150,000 married) who are not a dependent of another taxpayer and who have a work eligible social security number, are eligible for the full $1,200 ($2,400 married) rebate. In addition, they are eligible for an additional $500 per child. These deposits are going to be made by the Federal Treasury directly to taxpayers’ accounts. This is expected to happen in early April.
The Tax Foundation has created a useful summary of the CARES Act with detailed information about the expanded unemployment benefits and coverage as well as the direct payments to individuals and families. Click Here
Those are three of the key provisions of the CARES Act.
Other substantial provisions are:
A stabilization fund for large companies funded with $500 billion to ensure that businesses, like airlines or those directly impacted, can get loans from Federal government
$180 billion for our healthcare sector to fight the virus
$150 billion for states and municipalities
This is an immense stimulus package for our economy – larger than the one we saw during the financial crisis, and one that could be very effective in mitigating further impact from this crisis in the coming months. However, any permanent mitigation requires a medical solution in terms of faster diagnostics, treatment therapy, and more protective equipment. If we can find these solutions in the next two months, our economy can come back strongly over the summer.
If there are any questions, please do reach out to me and I will be happy to help.
State Representative Harry Arora
151st General Assembly District