What the Latest COVID-19 Relief Package Means for Individuals & Businesses
We’re committed to keeping you informed on programs and benefits you may qualify for due to impacts from COVID-19. That’s why we’ve created this guide to help you navigate the resources that may be available to you.
Continued Support for Individuals & Families
1) Checks from the Government
Some Americans will qualify for a one-time relief payment from the federal government, expected to be paid in the coming weeks. Beneficiaries can receive up to $600 per person or $1,200 for married joint filers, as well as $600 per child. You will not need to pay income taxes on the one time payment. The payments will decrease for individuals earning over $75,000 or married joint filers over $150,000, phasing out completely for individuals earning over $87,000/ joint filers over $174,000. The IRS will use your 2019 tax return to determine your income. There is nothing you need to do to receive this money. The IRS will either mail you a check, or direct deposit the money if it has your account information. Payments could be received before the end of the year.
Learn more: https://www.irs.gov/coronavirus
2) Additional Unemployment Benefits
The federal government has made temporary changes to unemployment insurance programs, increasing the number of people who qualify, how long they can receive benefits, and how much they can receive. Under the previous CARES Act, the unemployment benefits program ends December 31, 2020 for new claims, but can be claimed retroactively through January 27, 2020.
In the Consolidated Appropriations Act, the Pandemic Unemployment Assistance (PUA) program created by the CARES Act was extended, providing benefits to gig workers and others not traditionally eligible for them, for up to 50 weeks. Additionally, the Federal Pandemic Unemployment Compensation program (FPUC), which expired July 31, 2020, was reauthorized and modified to provide $300 per week to supplement benefits for weeks of unemployment beginning after December 26, 2020, and ending on or before March 14, 2021. On top of the $300/week, states may opt into an extra $100/week for individuals who have at least $5,000 a year in self-employment income. To qualify, you must certify you are unemployed, partially unemployed or cannot work for reasons related to the coronavirus. You cannot receive this assistance if you are receiving paid leave or are undocumented.
The US Department of Labor is continually updating their site with additional unemployment insurance guidance, Unemployment Insurance Relief During COVID-19 Outbreak.
For workers in Texas, the Texas Workforce Commission (TWC) has given additional guidance for self-employed, contract, and gig workers who have lost work due to COVID-19. These workers should apply for Pandemic Unemployment Assistance (PUA) using Unemployment Benefit Services (UBS).
When selecting a reason for job separation, these workers should select “reduced hours.” If the reduced hours are a result of COVID-19, these workers should select “COVID-19” under the disaster impact section. Complete all questions on the form to submit your claim.
The system will first review the claim for regular unemployment insurance eligibility, which will result in a denial. TWC will then automatically enroll these applicants in PUA.
Learn more:
3) Student Loans
Existing student loan relief from the CARES Act will not expire on December 31, 2020 as previously expected, and will now extend until January 31, 2021. All borrowers with federally held student loans from the last 10 years can pause paying their federal student loan payments without penalty, no new interest will accrue on your federal loan balance and student loan debt collection on defaulted student loan debt is halted — including wage and tax refund garnishment. The deferral program will not apply to private loans or some federally guaranteed loans. Visit StudentAid.gov/coronavirus for forthcoming details, including how to suspend your payments and the potential for extension of student loan relief beyond January 31, 2021.
Learn more: https://studentaid.gov/announcements-events/coronavirus
Support for Businesses
1) Small Business Loans
Paycheck Protection Program Extended
The Payment Protection Plan (PPP) program under the CARES Act has been extended with revised conditions. The additional $284 billion funding allotted to the PPP is available to businesses who experienced at least a 25% drop in sales from a year earlier in at least one quarter. Qualified businesses can be corporations or LLCs with under 300 employees, sole proprietors, self-employed and independent contractors. Some businesses that have already obtained a PPP loan may obtain a second PPP loan, called a “second draw”.
The loans provide 8 weeks of cash flow assistance through 100% federally guaranteed loans, and the money can be used for payroll, health care benefits, rent, mortgage interest payments, utilities, and interest on other debt obligations. Expenses paid for with PPP loans would be considered tax deductible.
The amount of the loan is capped at $2 million. According to the Small Business Administration, loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).
Generally, borrowers are eligible for PPP loan forgiveness if they apply at least 60% of the proceeds to payroll. Partial loan forgiveness may be available to those who don’t meet this threshold. Amounts that aren’t wiped must be repaid and are subject to an interest rate of 1%. Additional guidance on PPP Loan Forgiveness here.
PPP eligibility has been expanded to certain housing cooperatives, news organizations, section 501(c)(6) organizations, and Economic Injury Disaster Loan (EIDL) recipients.
Economic Injury Disaster Loans (EIDL)
Small businesses that have suffered substantial economic injury as a result of the Coronavirus (COVID-19) pandemic can apply for an EIDL at very affordable terms, with a 3.75% interest rate for small businesses, a 30-year maturity, and an automatic deferment of one year before monthly payments begin. EIDL loan applications will continue to be accepted through December 2021, pending the availability of funds.
Learn more:
- https://www.sba.gov/funding-programs/disaster-assistance
- https://www.sba.gov/document/report-covid-19-eidl-reports-2020
2) Extension of Payroll Tax Deferral
A deferral of the employee’s share of social security taxes, 6.2%, was authorized. Such amounts were originally deferred until April 30, 2021 and contained provisions for employers to withhold such amounts from employee payments through that date. The Act extends the repayment date through December 31, 2021, but does not provide forgiveness. Penalties and interest will not begin to accrue on the deferred amounts until January 1, 2022. Self-employed taxpayers can also postpone the payment of 50% of the Social Security portion of their self-employment tax for the same period.
THE INFORMATION IN THIS MEMO SHOULD NOT BE CONSTRUED AS LEGAL ADVICE OR LEGAL OPINION. THIS MEMO PROVIDES NO LEGAL OR COMPLIANCE ADVICE. COMPANIES SHOULD CONSULT WITH COUNSEL TO ENSURE FULL COMPLIANCE WITH ALL LEGAL REQUIREMENTS
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