Congress takes action on economic relief, not over finish line yet
The U.S. Senate unanimously passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act containing $2 trillion in financial support last night, but the measure is still awaiting a vote in the House of Representatives.
Included in the bill:
- Overall appropriations:
$500 billion for distressed sectors of the economy
$349 billion for loan guarantees
$100 billion for secondary market guarantee sales
$17 billion for loan subsidies
$10 billion for emergency EIDL grants
$675 million for Small Business Administration salaries and expenses
$240 million for small business development centers and women’s business centers for technical assistance for businesses
$25 million for the Office of Inspector General
$25 million for resource partner associations to provide online information and training
$25 million for Department of Treasury salaries and expenses
$10 million for minority business centers for technical assistance for businesses
- $454 billion in collateralized loans and loan guarantees through an exchange stabilization fund to provide to industries affected by COVID-19, including hotels.
- $350 billion for zero-fee loans of up to $10 million. Up to 8 weeks of average payroll and other costs will be forgiven if the business retains its employees and their salary levels. Principal and interest is deferred for up to a year and all borrower fees are waived. Can be used in coordination with other COVID-financing assistance established in the bill or any other existing SBA loan program.
- $10 billionto provide an advance of $10,000 to small businesses that apply for an SBA economic injury disaster loan (EIDL) within three days of applying for the loan. Loans of up to $2 million that carry interest rates up to 3.75 percent, as well as principal and interest deferment for up to 4 years may be used to pay for payroll and other operating expenses. The EIDL grant does not need to be repaid, even if the grantee is subsequently denied an EIDL, and may be used to provide paid sick leave to employees, maintaining payroll, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
- $17 billion for small businesses with standard SBA 7(a), 504, or “microloans.” For six months, SBA will cover all loan payments for existing SBA borrowers, including principal, interest, and fees. Also available to new borrowers who take out an SBA loan within six months. Encourages banks to provide further relief to small business borrowers by allowing them to extend the duration of existing loans beyond existing limits; and enables small business lenders to assist more new and existing borrowers by providing a temporary extension on certain reporting requirements. SBA borrowers may also apply for a loan that provides capital to keep their employees on the job.
- Loan Forgiveness. Establishes that the borrower shall be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date of the loan on payroll costs, interest payment on any mortgage incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020. Amounts forgiven may not exceed the principal amount of the loan. Eligible payroll costs do not include compensation above $100,000 in wages.
- Tax relief. Delay of estimated tax payments for corporations until Oct, 15, 2020; deferment of payroll tax to half paid on Dec 31, 2021 and other half on Dec 31, 2022; 5-year carryback for Net Operating Losses; increase in Section 163j business expensing from 30 to 50 percent of taxable income for 2019 and 2020; refundable payroll tax credit for 50 percent of wages; and allowing for immediate expensing for qualified improvements to a property.
Ohio General Assembly passes COVID-19 response measures
Ohio’s legislature is also busy this week on measures related to the state’s response. The House and Senate approved H.B. 97, which included some initial steps aimed at helping Ohio navigate the coming months. The Governor stated it will ensure the continuity of government, extended mail-in voting for our primary, clarity for schools and students, relief to workers impacted by COVID-19, and measures to make sure we are prepared to help Ohioans get back to work…” Some of the bill’s provisions:
- Places into law unemployment changes waiving first week waiting period, changing eligibility to include COVID-19 related unemployment situations, and waiving the requirement to search for work
- Prohibits public water disconnections
- Extends licenses issued by state agencies and political subdivisions and provides a 90-day window for renewal.
- Permits state boards & commissions, local & county governments, and higher education boards to operate meetings electronically so long as the public is aware and can participate
- Provides $20 million for state agency capital facility projects
- Permits schools to use distance learning to make up for any missed days or hours of instruction
- Waives state testing and report cards for the 2019-2020 school year
- Extends absentee voting by mail for the March 17, 2020 primary election to April 28, 2020, authorizes $7.0M (from Emergency purposes fund) to pay associated costs
Many questions in the past few days have focused on SBA loans and assistance. These loans of up to $2 million will be one important source of economic relief for our industry, and earlier this month Congress educated more funding to this effort.
AHLA is hosting a webinar today with experts from the Small Business Administration to explain how you can utilize this program and access these dollars.