By Steven Davidson
On July 27, 2020, Republicans of the Senate introduced another round of economic relief in response to the coming expiration dates of the CARES Act. The Health, Economic Assistance, and Schools (HEALS) Act, comes as the Republican response to the HEROES Act proposal that was passed by the House of Representatives earlier in July. It is a collection of bills that have been introduced by Republican Senators with a price tag of over a trillion dollars. Though a large amount, it is ⅓ of the cost and less broad than the 1,800 page HEROES relief program. Some of these bills directly impact small business owners while others stimulate different sectors but can still be beneficial.
Relief for Businesses and Business Owners Directly
Pandemic Unemployment Benefits
The CARES Act made it much easier for people to apply for unemployment benefits and allowed for up to $600 per week for those who qualify. These benefits ended July 31, 2020 under the CARES Act, but the HEALS Act makes the drop-off less abrasive. There would be a $200 per week supplement for another 2 months past this date. Then after September 2020, the benefits will equal the lesser of 70% of recipients' prior wages or $500 to incentivize those who can go back to work. For sole proprietors and independent contractors, this is important to note. If you have not done so already, now is the time to get on board. Requirements for acceptance have been lowered by the CARES Act, so almost everyone can be approved.
A big problem many employers and lawmakers were concerned with was that the program was paying more or equal to wages workers were receiving prior to the pandemic, making them less likely to return to work. Now, the program at least pushes workers in the direction of returning to their posts. This could be dangerous for some who still cannot return to their old jobs, but for business owners, this could be a good sign. Small business owners can hopefully regain some of their old employees and not have to go through the hiring process again.
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Changes to the Paycheck Protection Loan (click HERE to learn more)
The Paycheck Protection Program was a loan through the SBA for businesses with fewer than 500 employees. To incentivize worker retention, this loan provides full forgiveness if at least 60% of the loan amount is used for wages and keeping workers. It normally could only be applied for once, but the HEALS Act is changing that.
According to CNBC, small businesses with fewer than 300 employees have been hit especially hard, seeing a more than 50% fall in revenue as a result of the pandemic. As a result, this new Act is allowing for these small businesses to apply for a second round. Another $190 billion would be added to the PPP funds to support this decision. The bill also sets aside $25 billion for loans to small businesses with fewer than 10 employees.
With the new wave of PPP loans comes a few changes to help small business owners. Borrowers who receive $150,000 or less from the loan will automatically have their loan forgiven if they “sign and submit to the lender an attestation that the eligible recipient made a good faith effort to comply with the requirements under section 7(a)(36) of the Small Business Act” according to Repairer Driven News. These owners will still need to keep records of compliance of the requirements for three years because if not, the SBA can audit for fraud, ineligibility, or any other noncompliance. Funds will be allocated to prevent fraud and audits can be for up to $2 million to disincentivize misrepresentation.
For loans over $150,000, the PPP would still have the provision for 60% spending on payroll costs to be completely forgiven, but would not need to submit certain forms required by the CARES Act. Applicants no longer need to include documentation of employees on payroll and pay rates, such as payroll tax filing, or documents verifying payments on lease and utility obligations. They will, however, need to provide certification from a proper representative that the amount was used for the proper forgiveness purposes.
There would be a few changes to simplify the process for applicants. The new program will let businesses choose a preferred 8-week period to decide when to best use the loan money. They also have added support for the online portal to prevent fraud and simplify the process.
Along with the added PPP funds, the HEALS Act adds another loan program. $100 billion in funds would be used to give seasonal businesses in low-income communities a long-term, 1% interest rate loan.
Business Tax Credits (click HERE)
The Employee Retention Credit established under the CARES Act will also be altered, aiming to provide more tax relief. This tax credit is to help businesses that have kept employees on their payroll through the pandemic, much like the PPP. Unlike the PPP though, this is not a loan but rather a tax break which deducts the amount you are eligible for from your business taxes. The tax credit would rise from 50% to 65% of wages paid to retained employees.
The credits have also expanded to include operating expenses as a result of the pandemic. Up to 50% of expenses for things like virus testing, sanitation products, and personal protective equipment (up to $1,000 per employee), will be added to your eligible tax credits. The Act will also encourage domestic manufacturing of protective gear by offering tax credits to suppliers.
The bill also includes full tax deductibility (up from 50%) for business meals, targeted to stimulate the hard-hit restaurant industry.
Direct Relief Payments
Another round of stimulus checks are to be included into the package as well. Those with an income lower than $75,000 are eligible for a $1,200 check and $500 per dependent with a maximum of three claimed. This totals a possible $2,700 check, which may not seem like much, but it is essentially free money and any amount can help. Those with higher incomes may still receive a check, unless they are past the income maximum, but it will be for less. Though the conditions will stay similar, eligibility will be broadened to include more individuals, such as college students.
Stimulus checks are not a high point of debate for the next relief bill, so the likelihood of another one coming soon is very likely. Be sure to keep up with the conversation in government about the next package to be passed to know when it will be coming.
For more information, click HERE.
Other Beneficial Programs Through The HEALS Act
Here are some of the other programs that will come with the HEALS Act and why they are important for small businesses:
● $16 billion for COVID-19 testing
○ More testing means more control over the spread, which could make reopening much safer and faster.
● $25 billion for the hospital/provider fund which would reimburse county hospital and health care providers for COVID-19 related expenses and losses.
○ Providing resources for hospitals will ensure they are not overwhelmed by patients, which will give states more reason to speed up reopening.
● $15 billion for child care, including $5 billion through the Child Care and Development Block Grant (CCDBG) and $10 billion in a new flexible grant program, which would bolster county-administered child care programs and increase access to safe, affordable child care for county residents and county employees.
○ For business owners with children that need supervision, this can help you return to work without worrying about caring for your kids.
● $2.2 billion for Tenant-Based Rental Assistance (Section 8 vouchers), which would maintain housing opportunities for low-income families in counties who are experiencing a loss of income due to coronavirus.
○ Business owners who have had their income cut off completely by the pandemic and are living in low income housing can rest easier knowing more funding to maintain housing will keep the lights on.
● $1 billion for Public Housing Operating Fund will spend money on housing developments to help pay rent for certain communities.
● $930 million for FEMA grant programs, which provides $200 million for the Emergency Food and Shelter Program.
○ Those who need assistance can access food and shelter on an emergency basis.
● $500 million for grants to states for dislocated worker employment and training activities, which assist counties in funding employment and training opportunities to get residents back to work.
○ Small business owners who have lost their business or are looking to supplement income can use this program to find a new job.
○ More trained employees means more people to hire.
● $150 million for grants to states for youth workforce investment activities, which assist counties in funding education and training opportunities for youth to secure employment opportunities.
○ Business owners with kids looking for a job can help them find one with different state training and job education programs.
● $150 million for adult employment and training activities, which assist counties in serving adult populations that need training services to reenter the workforce.
○ This benefits small business owners who are in need of staff to keep operations running smoothly.
● $75 million for the Essential Air Service (EAS) mitigates the loss of overflight fees collected due to the pandemic that would typically fund the program. The EAS supports counties by ensuring continued air service to eligible communities (often small and/or rural areas) through subsidies to air carriers that enable the carriers to continue providing service between these communities and major airports.
○ Those who are in less accessible areas will still have foot traffic with flights still running through their area.
● BUILD Grants. The HEALS Act would also rescind any unobligated balances for USDOT’s Better Utilizing Investments to Leverage Development (BUILD) discretionary grant program that were awarded in FY 2018 and, instead, appropriate new funds in the same amount on September 30, 2020 to remain available through FY 2021.
For more information on the other programs, click HERE.
Things to Consider
This bill has not been passed and still needs to be passed to be implemented. This bill is a combination of multiple Republican bills, so Democrats will want to add some of their own plans. The bill does not provide an extension for areas like food stamps, moratorium on evictions, so they will be pushing to add those things. CNBC reports that House Speaker Nancy Pelosi thinks the bill is “pathetic” and other Democrats echo this sentiment, so it will take some time to reach an agreement.
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