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Federal Government Relief Programs

Senate passed the Economic Relief Plan for Individuals and Businesses (CARES Act). Below are the main benefits for business owners:

  1. Paycheck Protection Program (PPP): $349 billion allocated to help small businesses (<500 employees) impacted by COVID-19 to make payroll and cover other expenses from February 15 to June 30. Small businesses may take out loans up to $10 million, limited to a formula tied to payroll costs, and can cover employees making up to $100K per year. Loans may be forgiven if a firm uses the loan for payroll, interest payments on mortgages, rent, and utilities and would be reduced proportionally by any reduction in employees retained. Applications are made through your bank and not on the SBA website. More on this program later in this document.

  2. Employee Retention Credit: Employers are eligible for a 50% refundable payroll tax credit on wages paid up to $10,000 per employee during the crisis. The credit would be available to employers whose businesses were disrupted due to virus shutdowns and those that had a decrease in gross receipts of 50% or more when compared to the same quarter last year. The credit can be claimed for employees who are retained but not currently working due to the crisis for firms with more than 100 employees, and for all employee wages for firms with 100 or fewer employees.

  3. Employer-side Social Security payroll tax payments may be delayed until January 1, 2021.

  4. Economic Stabilization and Assistance to Severely Distressed Sectors: $454 billion in emergency lending to businesses, states, and cities. This includes $25 billion in lending for airlines, $4 billion in lending for air cargo firms, and $17 billion in lending for firms deemed critical to U.S. national security. Firms taking loans must not engage in stock buybacks for the duration of the loan plus one year and must retain at least 90 percent of its employment level as of March 24, 2020. Loans also come with terms limiting employee compensation and severance pay for firms taking loans. Emergency lending will be overseen by a Congressional Oversight Commission and a Special Inspector General. More information can be found Here and Here

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