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Coronavirus Relief Legislation: What’s in the Interim Stimulus Plan?

interim stimulus plan

On April 24, President Trump signed legislation that provides more federal money to help lessen the economic damage caused by the coronavirus pandemic. The Interim Stimulus Plan injects another $484 billion into the U.S. economy by amending the Coronavirus Aid, Relief and Economic Security (or CARES) Act that was signed into law in late March.

Refilling the PPP Bucket

One of the most important aspects of this legislation is the additional funds it provides for the Paycheck Protection Program (PPP). The CARES Act created this small business loan program to provide money to help small businesses stay afloat during the crisis but the original allocation of $349 billion was exhausted quickly. 

The Interim Stimulus Plan adds another $320 billion to this loan program. About $60 billion of this money will be aside for small, mid-sized and community lenders serving businesses in rural areas since many of these businesses were unable to get their PPP loan applications approved before the money ran out.

One of the biggest benefits of PPP loans is that they will be converted to grants and forgiven if a business meets certain conditions. More specifically, the loans will be forgiven if a business retains all employees for a period of eight weeks after receiving funds and maintains their salary levels during this time. In addition, loan proceeds must be used to meet payroll expenses or pay business rent, utilities or the interest on a commercial mortgage.

At least 75% of the loan amount must be used to cover payroll costs. However, the definition of these includes not only salaries and wages, but also employee benefits (e.g., group health insurance and retirement plan costs) and the employer portion of state and local payroll taxes. Rent, mortgage interest and utility payments must have all been in place on February 15, 2020 to qualify.

Replenishing the EIDL Program

The Interim Stimulus Plan also adds $50 billion in loans and $10 billion in grants to the Small Business Administration’s Economic Injury Disaster Loan (EIDL) program. Small businesses can borrow up to $2 million under this program and the loans feature an interest rate of 3.75% along with a repayment term of up to 30 years, depending on the business’ ability to repay funds.

The CARES Act allows small businesses with up to 500 employees that are experiencing a temporary loss of revenue due to the coronavirus to obtain EIDL advances of up to $10,000 within days of their application. The SBA simplified the EIDL application process and relaxed the credit standards while also extending EIDL relief to agricultural businesses with 500 or fewer employees.

In addition, the Interim Stimulus Plan provides $75 billion for hospitals and healthcare providers and $25 billion for coronavirus testing.

More Relief Likely on the Way

Congress has now passed and President Trump has signed four separate coronavirus relief bills in just one month — a legislative speed that’s unprecedented. And it appears that more relief legislation is likely on the way.

Some legislators want the next relief bill to include funding to help state and local governments deal with revenue shortfalls they’re experiencing due to the crisis. Others, however, have voiced concerns about the amount of debt that’s being accumulated by these relief measures.

In addition to support for state and local governments, other legislative provisions being discussed include providing financial support for essential workers, addressing food aid, funding the U.S. Post Office, cutting the payroll tax, increasing business tax breaks for business meals and entertainment, and spending on infrastructure.

We will continue to keep you posted on the latest legislative developments related to the coronavirus pandemic and how they could affect your family and your business.

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