President Trump signed the largest economic relief package in United States history on Friday, following passage by the United States Senate on Wednesday and the House of Representatives on Thursday. The “Coronavirus Aid, Relief, and Economic Security Act”, or CARES Act, is a $2 trillion support to directly combat the spread of COVID-19, loans for businesses, additional support for industries hardest hit, and direct financial assistance to individuals.
Note: This is meant as a high-level overview of COVID-19 assistance programs. See the controlling agency for complete details.
For Businesses
SBA Loans
The CARES Act establishes new loan category for the Small Business Administration (SBA). From Feb. 15, 2020 until June 30, 2020, the SBA can offer 100% federally backed loans to small businesses. These loans are to be used cover business operational costs like payroll, insurance premiums, utilities, health insurance for employees and dependents, rent, etc.
Eligible organizations include any small business, tribal business, nonprofit, veterans’ organization with 500 or fewer employees. There may be additional industry-specific size requirements added by the SBA.
High-Level Details:
- Loan amount is capped at $10 million. Individual loans, depending on time length or age of business and seasonality, are often 2.5 times the average monthly payroll costs incurred over the past year. Additional limits may be imposed.
- No collateral or personal guarantee is required.
- Interest rate is not to exceed four percent (4%).
- Any business that receives an SBA Disaster Loan on or after Jan. 31, 2020, can refinance the original loan under the new program.
- The SBA has recourse against any individual, shareholder, member, or partner of an eligible loan recipient for non-payment, unless the individual uses the loan proceeds for unauthorized purposes.
- There is no penalty for prepayments to the SBA.
For more information, visit the SBA COVID-19 Resources Page.
Paycheck Protection Program Loan Guarantee
Unlink the SBA loans, this category of loans are guaranteed by the SBA, but come from local lenders. Like the SBA loans, these loans are offered to small businesses with fewer than 500 employees (certain types of business with fewer than 1,500 employee), non-profits, and veterans organization.
Importantly, self-employed, sole proprietors, freelance and gig economy workers are also eligible to apply, provided the business entity was in operation before Feb. 15, 2020.
Details
- Requirements and details are similar to SBA Loans above.
- Loan requirements are similar as above.
- Payments are deferred up to six to 12 months
For more information, visit the SBA COVID-19 Resources Page.
Employee Retention Credits
Employers whose activities are suspended by government restrictions may be eligible refundable credit against payroll tax (social security) liability equal to 50% of the first $10,000 in wages per employee, which does include the value of health plan benefits.
Organization must:
- Have business operations fully or partially suspended operations due to orders from a governmental entity limiting commerce, travel, or group meetings; or
- Experience a year-over-year (comparing calendar quarters) reduction in gross receipts of at least 50% – until gross receipts exceed 80% year-over-year.
For more information, visit the SBA COVID-19 Resources Page.
For Individuals
Direct Assistance
The so-called “recovery rebates” provide direct cash assistance to American taxpayers. The base rate is $1,200 per taxpayer, plus a $500 per child.
Details:
- Recipients include taxpayers with adjusted gross income up to $75,000 (single)/$112,500 (head of household)/$150,000 (joint filers). Joint filers will receive $2,400.
- The rebate is phased out for taxpayers with higher incomes and is completely phased out for single filers, heads of household, and joint filers with incomes above $99,000, $136,500, and $198,000, respectively.
- All eligible taxpayers will receive a check, which will be processed automatically based on the taxpayers’ 2019 tax returns. If the taxpayer has not yet filed a 2019 tax return, the IRS will use their 2018 tax return.
- Taxpayers will have to account next year for any “recovery rebate” on their 2020 tax returns.
Early Withdrawal of Retirement Funds
The 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes. Please note, early withdrawals are still taxed. Taxes are spread over three years, or there is a three-year period to roll it back over.
401(k) Loans
Loan limits from 401(k)s has increased to $100,000 from $50,000.
Unemployment
The CARES act expands unemployment eligibility and pays an additional $600 per week for four months, on top of what state programs pay. Eligible workers will see unemployment benefits extended through Dec. 31, 2020. Self-employed, independent contractors and gig economy workers are also covered.
Housing-Specific Measures
The CARES Act includes federally backed single-family mortgage holders to receive forbearance for up to one year for those experiencing COVID-19 hardships. There is a 60-day ban on foreclosures on government-backed mortgages.
The CARES Act includes multifamily mortgage forbearance for all federally backed mortgages. Forbearance is offered at 30-day increments, with a maximum of 90 days. By the end of the national emergency or Dec. 31, 2020, whichever is first, owners of multi-family units will not be able to charge late fees or evict residents.
There is a 120-day moratorium on all evictions and related fees (on non-payment of rent only) for all rental properties receiving any type of federal assistance. After the 120-day period, property owners must give 30-day written notice to tenants of eviction. At the end of the 120-day period, all tenants must pay all rent due.
Housing First Minnesota staff is working around the clock to keep you aware of the latest information about COVID-19. For the latest news and information, visit housingfirstmn.org, the Housing First Minnesota blog, or connect with us on Facebook and Twitter.
