Update: Congress approved the bill and the president signed it into law on March 27, 2020.
As the $2 trillion stimulus package heads to Congress for approval, businesses are eagerly awaiting the benefits that it is expected to provide. We’ve scoured the bill to determine how it would most acutely impact small- and medium-sized firms, and we’ve got a few key points to share below.
Small Business Loan Options
Companies with 500 or fewer staff members who remain on the payroll throughout the coronavirus emergency period could be eligible for a small business loan so they can keep paying employees and prevent layoffs.
The loans are designed to make up for several weeks’ worth of payroll expenses, and are expected to be available through June 30. Portions of these loans would not have to be repaid if they are spent on employee payroll (up to a certain amount and for a finite time period), rent or utilities. Instead, the US Treasury Department would fund these portions of the bill. This forgiveness aspect of the loan essentially converts them into grants if the beneficiary uses them as intended and within the predetermined time frames.
The Small Business Administration will be in charge of managing the loan program, and is answering questions about its loan programs on the SBA website. Businesses interested in applying should have documentation of their previous six weeks’ worth of payroll available.
Payroll Tax Deferral
Eligible companies that are able to keep staff members on the payroll during the COVID-19 emergency period would have the option of deferring some payroll taxes this year. They would then pay part of the deferred taxes next year, and the rest in 2022. The caveat is that employers won’t receive the credit if they apply for small business loans during this period.
Sole Proprietors Can Access Unemployment Benefits
Under the package, freelancers, independent contractors and self-employed entrepreneurs will be eligible for unemployment benefits. The benefits will be calculated based on prior income, but are also expected to include an extra $600 weekly benefit in addition to their existing benefits. This supplement to the base pay is expected to last for four months, in a bid to help workers recoup more of their incomes than standard unemployment benefits would allow.
Bill Isn’t Signed Yet
As of this writing, the bill hasn’t yet been approved by Congress, after which it will head the president’s desk for a signature. Small businesses that are anxiously awaiting its passage are eager for the bill to go into effect. Keep an eye on the Escalon website and we will share updates on its progress.