As you read this, the massive ,federal COVID-19 recovery plan is making its way through bureaucracy into the hands of American families, and soon, this program could be a big help to most ECA members.
While the media described the plan as a $2.2 trillion package, President Trump, when signing the bill March 27th, noted that federal aid levels could rise as high as $6 trillion. That statement recalled the words of Daniel Burnham, the genius behind Chicago’s 20th Century architectural renaissance:
“Make no little plans; they have no magic to stir men’s blood, and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will never die, but long after we are gone, be a living thing, asserting itself with ever-growing insistency.”
“Stirred By Burnham, Democracy Champion,” Chicago Record-Herald, October 15th, 1910.
The BIG federal plan, formally known as the”Coronavirus Aid, Relief, and Economic Security (CARES) Act,” is providing small businesses with $350 billion allocated to firms with fewer than 500 employees for its initial effort.
Things to Know About CARES Act
While the Small Business Administration (SBA) oversees this paycheck protection program, the bill provides for an expedited origination process using banks and other lenders rather than dealing with government agencies, which should speed the process.
Your businesses can receive a loan of up to $10 million based on how much your company paid employees between January 1st and February 29th. The borrowed funds carry an interest rate of up to 4 percent. If you maintain the average size of your full-time workforce based on when it received the loan, you only pay back accrued interest.
After using 75 percent of the loan for payroll you can use funds to pay for up to 25 percent of overhead for 60-days, such as rent, mortgage interest and utility payments.
Here are other key details:
- A 50 percent refundable payroll tax credit on wages to retain workers
- Looser net operating loss-reduction rules that will allow businesses to offset more taxable income
- A delay in half of the employer-based payroll taxes for Social Security until 2021 and 2022
- Sole proprietors and other self-employed workers could be eligible for the expanded unemployment-insurance benefits the bill provides
Yes, you should talk to your accountant before pulling the trigger on this, but these programs may help restore our economy to a new, prosperous normal.
By Brendan Slagle, ECA President Email: [email protected]