Just before midnight on Monday, Congress passed a $900 million COVID-relief package as part of a more than 5,500-page omnibus spending bill for the coming fiscal year. Individuals and businesses across the country have been calling for additional assistance since the CARES Act provisions expired over the summer and the pandemic has continued to rage. This new legislation does not address the two key sticking points that have stalled negotiations over the last several months: COVID-19 exposure legal liability protections for businesses and schools; and financial aid to local and state governments, the tax collections of which have plummeted amid lower consumer and business spending.
In Louisiana, these missing provisions will be something to keep an eye on, but Capital Region business owners should take a little comfort in knowing that earlier this year our state legislature passed legal liability protections against COVID exposure claims for companies that are following health and safety guidelines in opening and operating their businesses. It is expected that these items will be back up for negotiation in a separate federal bill after the new year.
The new COVID-19 relief legislation offers similar types of assistance to its predecessor, the CARES Act. The $900 billion package contains some key items to support businesses and workers, including:
Small Business Assistance
The legislation revives the CARES Act’s Paycheck Protection Program (PPP) and Economic Injury Disaster Loan Assistance (EIDLA) Grants to the tune of $320 billion. These programs were lifelines to businesses stuck with the economic consequences of the public safety response to the COVID-19 pandemic earlier in 2020. While the forgivable PPP and EIDLA Grant kept many businesses afloat during the stay-at-home orders, many others are still not allowed to open, are struggling to stay open, or are considering closing under still challenging circumstances. A second round of forgivable PPP and other small business assistance is included in the legislation. Key provisions include:
- PPP loans available specifically for small businesses with 300 or fewer employees and that have sustained a 25% or greater revenue loss between any quarter of 2020 and the same quarter of 2019;
- Elimination of the requirement that Economic Injury Disaster Loan Advances be deducted from PPP loan forgiveness;
- Expansion of forgivable expenses to include supplier costs and investments in facility modifications, personal protective equipment (PPE) required for safe operation, and additional types of employee insurance compensation (i.e.: dental, visual.);
- Simplification of the PPP loan forgiveness process for loans of $150,000 or less;
- Set asides for smaller borrowers and underserved communities via Community Development Financial Institutions, credit unions, small community lenders and banks, Minority Depository Institutions, and the Minority Business Development Agency;
- Funding for independent live venue operators affected by COVID-19 stay-at-home orders;
- Extension of the section of the CARES Act providing payment of principal, interest, and associated fees on qualifying Small Business Administration loans;
- Assurance that PPP lenders who acted in good faith, followed all regulations, and relied upon borrower certification will have no enforcement action taken against them;
- A tax credit for employers offering paid sick leave and extension of the Employee Retention Tax Credit;
- Funding to increase guarantees on SBA 7(a) loans and reduce fees on 7(a) and 504 loans; provide loan subsidies for 7(a) loans; and provide Economic Injury Disaster Loan grant advances; and,
- Re-purposing of $138 billion in unspent allocations to be reinvested in the PPP program.
Unemployment Assistance
Although the number of combined unemployment claims filed by Capital Region residents is down about 80% from its 65K-claim-peak in the spring, it is unclear how much of that improvement is due to residents reaching the end of their benefit period, rather than returning to work. Approximately 12,000 Baton Rouge Area worker filed new or continuing unemployment claims over the week, representing a significant increase from the just over 2,000 that filed the week prior to the state’s March stay-at-home order.
Adding to the still terribly high number of unemployment claims being filed and the unknown number of people reaching the end of their eligible benefit period is the declining health of Louisiana’s formerly robust unemployment trust fund. Prior to the Pandemic, Louisiana had one of the strongest unemployment trust funds in the nation. The economic downturn stemming from the pandemic has led to the fund’s rapid depletion, Louisiana borrowing from the federal government to maintain minimum benefits, and the state legislature enacting a hold on the statutorily required financial consequences (increased UI taxes) of the depleted fund. The urgency of this issue is clear, for both unemployed individuals and the businesses that fund unemployment benefits. The newly passed legislation includes the following assistance:
- Extension of all pandemic unemployment insurance programs until March 14th;
- Federal supplemental unemployment insurance benefits expansion of $300 per week until March 14th (under the CARES Act, this was $600 per week, and widely panned as a one-size fits all approach to the 50 states, including Louisiana, where employers reported the amount cooled motivation to seek work); and
- $1 billion for state systems for technology modernization and fraud prevention.
Individual Income Assistance
- Another round of direct stimulus checks of $600 for each adult and child, with amounts decreasing for individuals with more than $75,000 in income and couples with more than $150,000 in income
Education, Housing, Student Loan Assistance, and More
The legislation is expansive and contains assistance for many business and individual needs. Among the funding provided is $82 billion for schools, including $10 billion for childcare, in part to aid in reopening. Some key provisions are outlined below:
- Child Care Stabilization Fund Grants to be used for personnel, sanitation, cleaning, PPE, fixed costs, rent, utilities, insurance, and other qualified expenses;
- Emergency investments in low-income communities via capital injections at minority lending institutions and eligible Community Development Financial Institutions;
- Rental assistance to be distributed by states and local governments;
- Extension of the CDC eviction moratorium until January 31, 2021;
- Funding for State Broadband Connectivity Grants, Emergency Educational Connectivity funding, and funding for libraries in rural and low-income areas to provide internet connected devices; and,
- Education funding for both K-12 and higher education, including a set aside for minority serving institutions.
The Act also provides funding for further vaccine development and distribution, as well as other virus-response agenda items. BRAC will continue to break down this legislation and the administrative rules that result from it, as the provisions and programs come into play. Check back at brac.org/recovery for more information.