It was a unanimous vote in the Senate Wednesday night to pass the “Keeping Workers Paid and Employed Act” which now moves to the House of Representatives. Most on Capitol Hill expect the Bill to make its way through the House sometime on Friday (March 27th). The Bill will help to prevent workers from losing their jobs and small businesses from going out of business due to the coronavirus outbreak.
The plan is to provide cash-flow assistance through federally guaranteed loans to small businesses who maintain their workforces and payroll during this emergency. It has been reported that if small businesses maintain their workforces and payrolls, the loans will be forgiven, which would help workers to remain employed and small businesses to more rapidly recover from the crisis.
Here are a couple of highlights from the Bill:
- Small businesses with 500 employees or fewer will be eligible to apply for the loans.
- Loans would be immediately available through existing Small Business Administration (SBA), certified lenders, including banks, credit unions, and other financial institutions.
- The Secretary of Treasury would be authorized to expedite the addition of new lenders and make further enhancements to expedite loans to small businesses.
- The size of the loans would be tied to an applicant’s average monthly payroll, mortgage, rent, and utility payments, and other debt obligations over the previous year.
- Conditional upon businesses retaining their workforce and payroll levels during the covered period (March 1, 2020, through June 30, 2020), the portion of the loan used to cover payroll and payments on pre-existing debt would be forgiven. Further, small businesses with tipped employees would receive forgiveness for additional wages paid to such employees during the covered time.
- Individuals are to receive direct financial relief payments of up to $1,200 (with additional payments of $500 for each child).
- The bill would provide $350B to support these loans to small businesses. Experts advise that it could be 3 or more weeks before such funds become available to qualified small businesses.
- Unemployment benefits for employees laid off will be extended from 26 weeks to 39 weeks.
- Gig workers (like Uber drivers) and the self-employed will have access to funding.
- There are also funding provisions for large corporations, hospitals, and Medicare.
A common question asked by small business owners is “what if I have already laid off some or all of my workforce?” The answer provided by some of the Senators that voted to pass the Bill is that it will be all about your average workforce size and bringing back those workers that you may have laid off. Those Senators have also stated that the “purpose” of these loans is not to serve as a “stimulus,” instead the purpose is to help cover payrolls and critical expenditures as a “relief initiative.”
While most economist and financial experts will say that we have entered into an anticipated recession (most had been predicting such prior to the virus outbreak), they are also hopeful that we will experience a “V” recovery. This is to say that their hope is that we see a sharp rebound from the low we have or will soon hit. Hopefully, the initiatives underway by the federal government will allow for a rapid recovery.
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