UPDATE: Congress has agreed on the details for the Senate to pass the CARES Act later today, March 25. This post will be updated with details once it has passed.
Small businesses are bearing the brunt of the Coronavirus’ effect on the economy. The Senate finally looks to be in a position to pass the Coronavirus Aid, Relief and Economic Security Act (CARES Act) either later today or tomorrow, providing much-needed relief for businesses across the U.S. This stimulus would be the largest in history at $2 trillion. Among the many proposals included are some aimed at increasing funding to states and hospitals, as well as the most talked-about proposal: direct cash payments to a large number of Americans.
The CARES Act proposes to change some of the rules regarding SBA 7(a) loans (which are separate from and stackable with SBA Economic Injury Disaster Loans). Under CARES, companies will be eligible for loan forgiveness to an amount equaling payroll and operating costs during the national emergency. Small businesses will also be able to take advantage of a number of grants. These programs are aimed at businesses that maintain their payroll during the crisis. The provisions currently only apply to 501(c)(3) and businesses under 500 employees. One concern is allowing only 501(c)(3) organizations, rather than all nonprofits, from being able to use this program.
The proposed legislation also delays payment of the employer’s portion of Social Security payroll tax until the end of calendar year 2020. 50% of the delayed taxes will be due in December of 2021 and the remainder will be due in December of 2022.
Self-employed and contract workers will benefit from proposed provisions allowing them to receive unemployment insurance because of Coronavirus losses. Typically, self-employed and contract workers are disqualified from collecting unemployment insurance.
While BRAC’s expectation is that the bill will finish up the legislative process within the week, the key sticking point that has caused delay is the $500 billion “Exchange Stabilization Fund,” which would be held by the Treasury to aid distressed industries. This piece of the proposal is contentious because of oversight provisions for the fund; current language would give the Treasury six months before it would need to disclose who received the funds and there is little regulation in the ways in which these funds could be spent.
Despite these concerns, the Senate looks likely to pass the measure in the next day and the House is expected to approve it shortly thereafter. It is important that Congress hear from the business community, and we encourage you to contact your Congressman and tell him to pass the CARES Act now.
This legislation is not final, and BRAC will continue to monitor as it moves through the process.
As BRAC’s Manager of Governmental Affairs, David Zoller is responsible for the organization’s governmental relations and advocacy efforts and managing other projects related to economic competitiveness and quality of life.