In the wake of the COVID outbreak, we have seen a wave of government stimulus programs intended to offset short-term liquidity issues experienced by many companies.
- The Coronavirus Preparedness and Response Supplemental Appropriations Act was the first round, signed into law early March, at an estimated $8.2 billion. The majority of the emergency relief appropriations went to the Department of Health and Human Services to fund research and response efforts into the novel coronavirus as well as funding for vaccinations and therapeutics. We also saw the initial round of additional funding for the Small Business Administration’s Economic Injury Disaster Loan (“EIDL”) program.
- The Families First Coronavirus Response Act (“FFCRA”) was signed into law mid-March and marked the second major funding initiative in response to the COVID pandemic. The estimated $192 billion bill implemented many changes to increase public health measures, expanded unemployment benefits, fund coronavirus testing, increase food stamp funding, and further examination of the virus. The most notable subsidy was to provide payroll tax credits to employers under the Family and Medical Leave Act (“FMLA”). The provision allowed taxpayers to offset paid leave with payroll tax credits.
- The Coronavirus Aid, Relief, and Economic Security (“CARES”) included many programs to help businesses, organizations, and individuals weather the COVID-19 pandemic. The $2.3 trillion bill was enacted late March and rounded out the third phase of COVID-related stimulus. The Act included checks to most Americans, increased unemployment benefits, state and local government support, additional funding for the SBA’s EIDL program, welfare and education spending, disaster assistance, health-related spending, tax cuts, and subsidies to specific industries. The Act also established the Paycheck Protection Program, which provided eligible businesses with forgivable loans to fund specific payroll and non-payroll costs. Our CARES Act Loan Consulting Team regularly monitors updates and shares information to help leaders make the best decisions for their organizations. Businesses that borrowed funds through the Paycheck Protection Program (PPP) may need help figuring out loan forgiveness. Click here to learn more about our PPP Loan Forgiveness Services.
- The Main Street Lending Program (“MSLP”) was established by the Federal Reserve to support lending to small and medium-sized businesses and nonprofit organizations that were in sound financial condition before the onset of the COVID-19 pandemic. The program operates through five facilities based on the size of the company, financing uses, and loan amount. The program is structured to offer low-interest, cash-flow favorable loans to businesses.
- The Small Business Administration (“SBA”), as part of their coronavirus debt relief efforts, is also offering payment deferral on new and existing loans. The SBA will pay six months of principal, interest, and any associated fees that borrowers owe for all current 7(a), 504, and Microloans in regular servicing status, as well as new 7(a), 504, and Microloans, disbursed before September 27, 2020. For loans not on deferment, SBA will begin making payments in the March-April timeframe with the next payment due and will make six monthly payments. For loans currently on deferment, SBA will begin making payments with the next amount due after the deferment period has ended, and will make six monthly payments. Lastly, for loans made after March 27, 2020, and fully disbursed before September 27, 2020, SBA will begin making payments with the first payment due on loan and will make six monthly payments.
- Several state and local governments, economic development agencies, and even some private companies are offering grant programs to assist companies during this time further.
More legislation is on the horizon. Our team can help you understand what aid is available, how to access it, and how to utilize it. For the latest thought leadership and updates about government stimulus programs, visit our COVID-19 Resources page.
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