- Key elements include $350 billion in loan funding to help small businesses impacted by COVID-19
- A stimulus package of $500 billion would help affected industries
- Qualifying companies would be able to defer payroll taxes
- Direct payments would be sent to many U.S. citizens
- Unemployment benefits would be expanded, both in the dollar amount and in who might qualify
In the wee hours of Wednesday, March 25, the U.S. Senate and the White House agreed upon a $2 trillion stimulus package, with bipartisan support, to help to stabilize the country’s economy during the coronavirus pandemic. It was then passed by the House of Representatives on March 27, 2020. Within a couple of hours, President Donald Trump signed the legislation into law.
Key elements of this package include $350 billion in loan funding for small businesses. This funding is specifically targeted to help companies that are financially struggling because of the COVID-19 crisis and to help keep American workers employed during a time when many businesses are at least temporarily laying people off or even closing down for a period of time. In addition to these small business loans, companies that qualify are expected to be able to defer payroll taxes until 2021.
Components of the bill include:
- A stimulus package of $500 billion for affected corporations, including but not limited to airlines and cruise lines
- $100 billion for hospital assistance
- About $150 billion in state and local stimulus funding
- Increased unemployment insurance
- Direct payments to some U.S. citizens
Small Business Interruption Loans
Companies that have 500 or fewer employees that continue to operate and pay workers during the COVID-19 crisis can be eligible for specific loans. These funds would be used to meet payroll to help prevent layoffs from taking place. Loans would cap at $1,540 per week for each employee and can be used to cover up to six weeks of payroll.
These loans would come through financial institutions but be federally guaranteed, available to qualifying businesses through an emergency period, ending on June 30. The loans could be forgiven if the company continues to meet payroll through the coronavirus crisis.
During this rapidly evolving situation, increasing numbers of shoppers are turning to online businesses to order products and have them delivered to their homes. The stimulus package can also provide relief to the online businesses that are facing a sudden increase in demand, and provide employment opportunities to laid off workers.
Qualifying for Payroll Tax Relief
Businesses that keep employing workers during the crisis can have the option of deferring payroll taxes. The goal is to allow these companies to use their money to continue to meet payroll, which would help businesses and employees alike. This legislation doesn’t forgive the amount of money owed, but employers could delay 2020 payments for payroll taxes, and then pay half of what’s owed for this year in 2021—and the other half in 2022.
Relief to Individuals
Direct payments would be based upon income reported in 2018, or if filed, 2019 tax returns. Payments would cap out at $1,200 per adult, with the amounts declining for people who made more than $75,000 individually or for married couples, filing jointly, who made more than $150,000.
Unemployment insurance would be boosted, with payments being larger than what’s typical. Plus, freelancers/gig economy workers and furloughed employees (those who are not getting paychecks but are still receiving health benefits from employers) could also qualify. The maximum allowable weekly benefit would be increased by $600 per week, which would mean that laid off workers could potentially receive their full wages for four months.
Editor’s note: Shippo is fully operational and here to help with any questions you might have. And, for further information on resources for small businesses, read Gusto’s COVID-19 Relief Resources for SMBs spreadsheet.
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