Highlights from the Coronavirus Stimulus Package
March 30, 2020
The United States Congress and President Trump have passed the CARES (Coronavirus Aid, Relief and Economic Stimulus) Act, a $2 trillion stimulus package. Below are our key takeaways from the legislation.
Title I: Small Business Act
- Increases government guarantee of loans under the Small Business Act to 100% through the end of 2020
- Increases maximum loan amount to $10 million through the end of 2020
- Loans can be used for payroll support, paid sick & medical leave for employees, insurance premiums, and overhead costs
- Allows lenders to make their own determinations regarding a business’s eligibility for loans, rather than requiring lenders to seek approval through official channels
Title II: Assistance for American Workers, Families and Businesses
- Pandemic Unemployment Assistance (PUA) program extends unemployment benefits ($600 per week for up to 4 months) to those not typically eligible, including self-employed workers, independent contractors, and those with limited work history, who are unable to work due to the outbreak.
- Extends traditional timeframe for unemployment benefits by 13 weeks (through end of 2020)
- Direct cash payments of $1,200 for all U.S. residents whose AGI is $75K or less. For married couples, the payment is $2,400 with an income threshold of $150K. Additional payments of $500 per child.
- Waives 10% early distribution penalty (for withdrawals of up to $100K for coronavirus-related purposes) for qualified retirement accounts
- Certain employers are eligible for a refundable payroll tax credit in the amount of 50% of wages paid to employees during COVID-19 outbreak. Criteria include:
- Operations fully or partially suspended due to COVID-19 outbreak; OR
- Gross receipts declined by more than 50% for the quarter, year-over-year
- Previously, NOLs could only be carried forward, not backward, and could shield up to 80% of taxable income. With the CARES Act, NOLs generated in 2018, 2019, and 2020 can be carried back, up to 5 years, and can shield 100% of taxable income in tax years before 2021.
- Business interest deduction limitations temporarily made more favorable
- Businesses can defer payment of their 2020 employer payroll taxes, with half the payment now due 12/31/2021 and the other half due 12/31/2022
- Technical correction to the TCJA allows for a 15-year recovery period for Qualified Improvement Property (QIP), which is now eligible for bonus depreciation.
Title III: Supporting America’s Health Care System in the Fight Against Coronavirus
- $1.32 billion in additional funding for community health centers
- Employers’ leave payments are capped at $200 per day and $10,000 total per employee
- Employers’ sick leave payments are capped at $511 per day and $5,100 total (if an employee is sick) or $200 per day and $2,000 total (if an employee is caring for a sick or quarantined child)
- All testing for COVID-19 is covered in full by private health insurance companies
- Federal student loan payments (interest and principal) are deferred for 6 months (through September 30, 2020) without penalty
Title IV: Economic Stabilization and Assistance to Severely Distressed Sectors of the United States Economy
- $17 billion in direct lending for businesses involved in national security
- $454 billion for the Federal Reserve to issue loans, loan guarantees, and investments for eligible businesses
Title V: Coronavirus Relief Fund
- $150 billion in funding for states, territories, and tribal governments to cover coronavirus-related expenses, issued proportionally based on population