President Trump has signed a $2 trillion economic relief plan which contains several provisions to offer assistance to small businesses affected by the coronavirus pandemic. Its components include stimulus payments to individuals, expanded unemployment coverage, student loan changes, different retirement account rules and more.
Here’s how the stimulus package could help your business, and how to find out whether you’re eligible.
An emergency grant of up to $10,000: Small businesses may apply directly to the federal Small Business Administration (SBA) to receive an economic injury disaster grant of up to $10,000 that does not need to be paid back.
The money would be paid out to business owners within three days of their application’s submission. It can be used to maintain payroll, cover paid sick leave and service other debt obligations.
Short-term forgiveness on new loans of up to $10 million: The bill allots $350 billion for special Small Business Administration loans that may be partially forgiven if certain conditions are met.
SBA lenders will be authorized to make loans equal to 250% of an employer’s average monthly payroll up to $10 million.
Under that loan, eight weeks’ worth of payroll obligations (including wages and benefits), plus rent or mortgage payments and utilities will be forgiven, and the amount forgiven would not be treated as taxable income to the small business owner.
The new loans will be available through 800 SBA-approved banks, credit unions and other lenders. But the bill also calls on the SBA and Treasury to increase the number of lenders offering the new loans. And it calls on the agencies to expedite the loan process.
Lastly, owners who also take the $10,000 grant described above will see the amount of their loan forgiveness reduced by $10,000.
Provides a break on paying existing SBA loans: Business owners that already have an existing SBA loan will not have to pay interest or principal on it for six months.The bill allots $17 billion for the SBA to cover those payments instead.
A payroll tax credit to help retain employees: Businesses that have experienced a 50% drop in gross receipts relative to the same quarter last year may qualify for a payroll tax credit worth up to $10,000 per employee so long as they are still paying their employees wages and/or health benefits.
Even businesses that have furloughed employees due to forced closures under state and local mandates may claim the credit as long as they are still paying their workers wages or health benefits on furlough.
The credit would reduce the small business’ payroll tax liability and the employer may get an advance on that credit from the IRS.
The credit would also be refundable, meaning it would still be paid in full even if it exceeds the business owner’s payroll tax liability.
Unemployment benefits for Self-Employed people: Under the new bill, unemployment benefits would be expanded to included Self-employed and part-time workers who are unemployed, are partly unemployed or cannot work for a wide variety of coronavirus-related reasons.
The federal government will provide an extra $600 per week for up to 4 months on top of your state’s current state unemployment benefits. State unemployment benefits range from $200 to $550 per week on average and collected between 12 and 28 weeks.
Part-time workers would be eligible for benefits, but the benefit amount and how long benefits would last depend on your state. They would also be eligible for the additional $600 weekly benefit.
Who is covered: If you’ve received a diagnosis, are experiencing symptoms or are seeking a diagnosis — and you’re unemployed, are partly unemployed or cannot work as a result — you would be covered. The same goes if you must care for a member of your family or household who has received a diagnosis.
If you rely on a school, a day care or another facility to care for a child, elderly parent or another household member so that you can work — and that facility has been shut down because of coronavirus — you would be eligible.
If you had to self-quarantine you would be covered. The legislation also says that individuals who are unable to get to work because of a quarantine imposed as a result of the outbreak would also be eligible.
If you are unemployed, partly unemployed or unable to work because your employer closed down, you would be covered under the bill.
Who is not covered: Workers who are able to work from home, and those receiving paid sick leave or paid family leave would not be covered. New entrants to the work force who cannot find jobs would also be ineligible.
How long would the benefits last: The extra $600 payment would last for up to four months, covering weeks of unemployment ending July 31.
Expanded coverage would be available to workers who were newly eligible for unemployment benefits for weeks starting on Jan. 27, 2020, and through Dec. 31, 2020.
Relief for renters in the bill: The bill would put a temporary, nationwide eviction moratorium in place for any renters whose landlords have mortgages backed or owned by Fannie Mae, Freddie Mac and other federal entities. This will last for 120 days after the bill passes, and landlords also can’t charge any fees or penalties for nonpayment of rent.
How to apply for unemployment benefits: Unemployment benefits will be administered by your state’s unemployment offices. To Apply, find your state here and click on the link to apply with your state’s office. Or for more information about filing for self employed unemployment benefits, check this unemployment benefits finder.