As part of larger efforts to help the United States respond to the COVID-19 outbreak within its borders, the US federal government has issued and is expected to issue stimulus measures to support American businesses and individuals. The specifics of these measures vary from funding and loans to revised policies. Below is a summary of the various measures.
On March 6, 2020, the Coronavirus Preparedness and Response Supplemental Appropriations Act (H.R.6074) was signed into law by President Trump. This bill, referred to as "Stim 1," provides $8.3 billion in emergency funding for federal agencies to respond to the COVID-19 outbreak. Of particular interest to many small businesses is $1 billion in loan subsidies to companies that have incurred financial losses due to the COVID-19 outbreak.
On March 18, 2020, President Trump signed into law the Families First Coronavirus Response Act (H.R.6201). This bill (i.e., "Stim 2") provides for paid sick leave and free COVID-19 testing, expands unemployment benefits and food assistance, and requires employers to provide additional protections for healthcare workers. In particular, this bill includes $15 million for the US Internal Revenue Service to implement tax credits to employers for paid sick and paid family and medical leave. Stim 2 requires businesses with fewer than 500 employees to provide paid sick leave to employees at their regular rate, if the employee needs to seek medical help or self-quarantine due to COVID-19. Such payment shall not exceed $5,110 per employee. In other instances, these businesses need to pay two-thirds of the regular rate, if the employee is caring for someone who is seeking medical help or self-quarantining, or the employee is caring for his/her child when the school or childcare center is closed due to COVID-19. Such payment shall not exceed $2,000 per employee.
On March 19, 2020, Republicans in the Senate introduced the Coronavirus Aid, Relief, and Economic Security Act, or the "CARES Act" (S.3548). The contents of this bill are yet to be finalized. It has to be passed by the Senate, the House and then signed by President Trump before becoming law. The Republicans’ proposal mainly includes (1) financial help to Americans, (2) loans and benefits for businesses, (3) loans for impacted industries, and (4) assistance for healthcare. Specifically:
- Financial Help to Americans
- Up to $1,200 payment for each American making less than $75,000 a year.
- Up to $2,400 payment for each married couple making less than $150,000 a year, with an additional $500 for each child.
- Delay filing date of tax returns from April 15, 2020, to July 15, 2020.
- Postpone individual estimated tax payment due date until October 15, 2020.
- Loans and Benefits for Businesses
- $300 billion in loans to small businesses:
- If small businesses maintain payroll, loans will be forgiven.
- Small businesses can use loans on payroll support, such as paid sick or medical leave, employee salaries, mortgage payments and any other debt obligations.
- For all businesses:
- Postpone corporate estimated tax payment due date until October 15, 2020.
- Employers may defer payment of the employer share of the Social Security tax.
- Loans for Impacted Industries
- $50 billion loans for passenger air carriers.
- $8 billion loans for cargo air carriers.
- $150 billion loans for other eligible entities deemed by the Treasury Secretary that have incurred losses as a direct result of the coronavirus outbreak.
- Assistance for Healthcare
- Free up medical resources to combat COVID-19.
- Ensure access to healthcare for COVID-1
House Democrats, for the most part, support substantial parts of the Senate proposal. However, there seems to be widespread support in the House for including funding for infrastructure (e.g., road and rail repairs/upgrades) and an expansion of Social Security benefits. It remains to be seen how the Republicans and Democrats will work out these and other differences in order to finalize a Stim 3 package.
A Stim 4 package is already beginning to take shape in the Senate and House. We expect Stim 4 to focus on financial relief for the most heavily impacted industries (e.g., hospitality). The National Restaurant Association requested $145 billion for a Restaurant and Foodservice Industry Recovery Fund. The International Franchise Association requested up to $300 billion to fund the continued liquidity of its members. The US Travel Association and the American Hotel and Lodging Association requested $150 billion for hotels and $100 billion for travel-related business, such as restaurants, tourist attractions and retail shops. Finally, the National Association of Manufacturers has asked for a $1.4 trillion fund in the form of loans to provide liquidity to its members.
Stim 4 is still very much a work in progress. Thus, there is still time for businesses impacted by the COVID-19 outbreak to devise and pursue a government affairs strategy in Washington aimed at getting help.