BREAKING NEWS: President Trump just signed the biggest economic stimulus package in American history. The House of Representatives passed the $2.2 trillion relief package, the third and final economic stimulus package which includes funds for direct payments to individuals and financial assistance to businesses.

The bill itself runs 880 pages and extends an extraordinary lifeline to Americans in virtually every circumstance who have been affected by the coronavirus – workers, the unemployed, the self-employed and contractors. The impact of this pandemic has led to a record 3.28 million Americans applying for jobless benefits amid layoffs tied to the virus. 

While this stimulus package includes relief for many industries, we focus on the small businesses and what the historic $2 trillion coronavirus stimulus package will do to help. The bill will allocate up to $370 billion in emergency lending to small businesses to keep them afloat during these months when many businesses have had to close and lose workers in an effort to “flatten the curve” and stop the spread of the coronavirus.

Small Business Loan: 

Businesses with 500 or fewer employees that continue to employ and pay workers through the coronavirus crisis.

The government would provide loans to small and midsize businesses to prevent layoffs and to continue paying employees. Small businesses will be eligible to receive loans capped at 2.5 times their monthly payroll expenses, including expected tips for tipped workers but excluding employees earning more than six figures. 

Importantly, the balance of these loans would be completely forgiven if a business maintains salary and benefits for its workforce, meaning that these payments are more likely to function as direct subsidies rather than loans paid back to taxpayers. 

Payroll-tax relief

Alternatively, the stimulus bill would give businesses tax credits and allow them to defer their payroll taxes so they can continue paying employees. However, employers that apply for small-business loans would not receive the credit.

Businesses that continue to employ workers through the coronavirus crisis. Employers, including those that have been ordered to close, would be eligible for a new payroll-tax credit as long as they keep workers employed through the crisis. The credit could be applied to all wages for employers with fewer than 100 employees, while the benefit is capped at $10,000 in wages per employee for larger employers.

As a consumer, how does this help?

American adults are eligible for a refundable tax credit check of up to $1,200 ($2,400 for joint tax returns), and those with little or no tax liability would get at least $600 ($1,200 for joint returns). Families would receive an additional $500 for each qualifying child.

The payment would be progressively reduced for higher-income earners, starting at $75,000, or $150,000 for a joint return. The amount you receive would be decreased by 5% of the amount your income exceeding $75,000, and individuals earning more than $99,000 wouldn’t qualify at all. The government will use your 2019 tax return, if you’ve filed it, to decide whether you qualify and how much you receive. Otherwise, the determination will be based on your 2018 return.

The economy is taking an enormous hit from the coronavirus as Americans across the country continue to social distance themselves and stay at home, away from restaurants, bars, malls, movie theaters, sports arenas and other gathering spots – either by choice or by law. Consumer spending makes up about 70% of the economy and the hope is that this extra financial boost will support spending on necessities like food, health and rent creating a greater influx of cash to the economy. 

Overall summary of what the bill includes:

• More than $350 billion to aid small businesses.
• $150 billion to hospitals and other health care providers for equipment and supplies.
• Direct payments in early April to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child.
• Unemployment insurance extension to four months, plus an extra $600 weekly, with more workers eligible.
• $500 billion for distressed companies, including industry-specific loans for airlines, hotel companies and others battered by the economic downturn.

What the $2 trillion stimulus means for you and your businessAlthough this economic rescue package is incredibly expensive, additional spending may be needed in the coming months if the coronavirus cannot be subdued.