President Trump signed a sweeping $2 trillion fiscal measure to shore up the U.S. economy as it weathers the devastation of the coronavirus pandemic, cementing it as the largest fiscal stimulus package in modern American history.
The 883-page bill, titled the Coronavirus Aid, Relief, and Economic Security (CARES) Act includes thousands of dollars in direct payments to most Americans, and provides more than $377 billion in support to small businesses.
The bill includes:
Direct payments: Americans with adjusted gross income of up to $75,000 ($150,000 for married couples) will receive a one-time direct deposit of up to $1,200 (married couples will get $2,400) plus an additional $500 per child. This is true even for those who have no income, as well as those whose income comes entirely from non-taxable, means-tested benefit programs, such as Social Security. The payment will be subject to a 5% phaseout, in which an $85,000 income will reduce the payment by $500, dropping it down to $700. At $99,000, the payment will completely disappear. Payments will not be paid to single filers earning more than $99,000, head-of household filers with one child making more than $146,500, and joint filers with no children making more than $198,000.
Use of retirement funds: The bill waives the 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes, retroactive to Jan. 1.
Small businesses: $350 billion is being dedicated to prevent layoffs and business closures while workers have to stay home during the outbreak. Companies with 500 employees or fewer that maintain their payroll during coronavirus can receive up to 8 weeks of cash-flow assistance. The “Paycheck Protection Program” would provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed and zero fee loans of up to $10 million to small employers who maintain their payroll during this emergency. If the employer maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers to remain employed and affected small businesses and our economy to recover quickly from this crisis. Principal and interest is deferred for up to a year and all borrower fees are waived. This proposal would be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.
To qualify, businesses have to prove they took a 50 percent loss compared to the same quarter in years past. And to keep companies from double-dipping on aid under the bill, employers won’t be able to get special SBA loans if they opt for the tax credit.
The stimulus bill also includes $10 billion in funding for a provision to provide an advance of $10,000 to small businesses and nonprofits that apply for an SBA economic injury disaster loan (EIDL) within three days of applying for the loan. EIDLs are loans of up to $2 million that carry interest rates up to 3.75 percent for companies and up to 2.75 percent for nonprofits, as well as principal and interest deferment for up to 4 years. The loans may be used to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
The EIDL grant does not need to be repaid, even if the grantee is subsequently denied an EIDL, and may be used to provide paid sick leave to employees, maintaining payroll, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. Eligible grant recipients must have been in operation on January 31, 2020. The grant is available to small businesses, private nonprofits, sole proprietors and independent contractors, tribal businesses, as well as cooperatives and employee-owned businesses.
A business that receives an EIDL between January 31, 2020 and June 30, 2020 as a result of a COVID-19 disaster declaration is eligible to apply for a Paycheck Protection Plan loan or the business may refinance their EIDL into a Paycheck Protection Plan loan. In either case, the emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven in the Payroll Protection Plan.
Small business federal government contractors also get further protections. Federal agencies are required to extend contract performance periods and promptly pay small business contractors impacted by COVID-19.
Finally, the bill also includes $17billion short term debt relief for small businesses. For six months, SBA is required to pay all principal, interest and fees on all existing SBA loan products including 7(a), Community Advantage, 504, and Microloan programs for six months. Under this provision, SBA will cover all loan payments for existing SBA borrowers, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out an SBA loan within six months after the President signs the bill. The measure also encourages banks to provide further relief to small business borrowers by allowing them to extend the duration of existing loans beyond existing limits; and enables small business lenders to assist more new and existing borrowers by providing a temporary extension on certain reporting requirements. While SBA borrowers are receiving the six months debt relief, they may apply for a PPP loan that provides capital to keep their employees on the job. The six months of SBA payment relief may not be applied to payments on Paycheck Protection Plan loans. The bill requires that SBA enact these programs with regulations no later than 15 days after the Act is signed into law.
Retail Tax Fix: Retailers, restaurateurs and hotels will be able to immediately deduct from their taxes what they spend on property improvements. They were supposed to get the write-off in the 2017 tax overhaul, but a glitch actually made them worse off. The fix will help by letting businesses file amended returns from prior years but it isn’t enough to dig out these industries which are among the hardest hit by mandatory shutdowns and social distancing directives.
The unemployed: The program’s $250 billion extended unemployment insurance program expands eligibility and offers workers an additional $600 per week for four months, on top of what state programs pay. It also extends UI benefits through Dec. 31 for eligible workers. The deal applies to the self-employed, independent contractors and gig economy workers.
Hospitals and health care: The deal provides over $140 billion in appropriations to support the U.S. health system, $100 billion of which will be injected directly into hospitals. The rest will be dedicated to providing personal and protective equipment for health care workers, testing supplies, increased workforce and training, accelerated Medicare payments that include a 20% payment bump for treating patients with the virus, and supporting the CDC, among other health investments.
Telemedicine: The FCC would get $200 million for boosting Skype-style health checkups by investing in services and devices that help health care providers connect remotely with patients. The FCC helps run a rural health care program devoted to subsidizing the connectivity for health care providers. This represents just the FCC’s stake in telemedicine, not other parts of the government.
Coronavirus testing: All testing and potential vaccines for COVID-19 will be covered at no cost to patients.
Large corporations: $500 billion will be allotted to provide loans, loan guarantees, and other investments, overseen by a Treasury Department inspector general and an accountability committee. These loans may not exceed five years and cannot be forgiven. Airlines will receive $29 billion in grants and $29 billion in loans and loan guarantees, as well as a reprieve from paying excise taxes on the price of a ticket, the fuel tax and the cargo tax. These grants are conditioned and prohibit airline stock buybacks and impose limits on executive compensation.
Payroll taxes: The measure allows individuals to delay the payment of their 2020 payroll taxes until 2021 and 2022.
States and local governments: The bill provides states and local governments with $150 billion, with $8 billion set aside for tribal governments. The bill stipulates that within 30 days of enactment the Treasury secretary shall distribute funds to state and local governments. Amounts going to each of the 50 states will be determined in proportion to the population, with no state government receiving less than $1.25 billion. Eligible local governments are defined as any governing body below the state level having more than 500,000 people under its purview.
Agriculture: The deal would increase the amount the Agriculture Department can spend on its Commodity Credit Corporation bailout program from $30 billion to $50 billion to shore up losses. The bill would also provide USDA $9.5 billion to combat economic effects of a COVID-19 downturn as states and localities close farmers markets and restaurants.
Distilleries: Distilleries received a temporary exemption from an excise tax for alcohol they use to make hand sanitizer that’s produced and distributed within Food and Drug Administration guidelines.
The bill is vast, and also includes grants and loans for the postal service, food assistance, colleges and universities, states and school districts, and the military including the National Guard.
 Pick your preferred pronunciation — Donald Trump or Bernie Sanders-style — of “billions and billions” and read aloud. To help assess the scale of these staggering figures, know that a person can count aloud to a million in under two weeks, but it would take more than 30 years to count to one billion, and over 30,000 years to count to just one of the trillions provided for in this package.