Dear Clients & Friends,
Yesterday the President signed a massive economic stimulus package to try and stabilize the economy. We will all have many questions, I am sure! At this time, I don’t have all the details but I wanted to share what information I do have. There seems to be something in the package for almost everyone. Please pay attention to all your news sources in the coming weeks & days as details emerge so that you do not forget to take advantage of the benefits the government is offering. Attached to this email is an article from the Journal of Accountancy outlining some of the provisions & benefits in this bill.
In addition, I believe this is an unprecedented opportunity for the self-employed and small business owners to secure business loans at very favorable interest rates and terms. Furthermore, the loans may be forgivable to the extent spent on retaining employees and/or paying business operating expenses during the covered COVID-19 crisis period.
The government has earmarked $349 billion for federally-guaranteed small business loans to be dispensed by banks. The total amount of these forgivable loans will be 2.5 times the business’ monthly operating costs. All operating costs, including employee payroll (and other forms of compensation paid), employee health care, mortgage, rent, utilities, and debt payments are included. I recommend that you contact your banking relationship ASAP to express your interest and request the loan application. Detail guidance is supposed to be issued in the coming weeks.
Also, the Small Business Administration (SBA) is offering economic disaster loans. This is an opportunity for a very low-interest loan (like 3% over 30 yrs.) for those who don’t have other borrowing options. It’s designed to cover up to one year’s business expenses, including employee payroll and other operating costs. SBA is the direct lender, as opposed to the forgivable loan program being administrated by the banks and backed by the federal government. Apply online at www.sba.gov/disaster.
For individual workers, unemployment compensation benefits have been dramatically expanded, with an extra $600/week and an additional 4 months being offered. Certain self-employed and gig economy workers will also be eligible somehow.
Recovery rebate checks up to $1,200 per person and $500 per dependent child, subject to income limitations are also on the way to those who have filed 2018 or 2019 tax returns or collect social security benefits. For some people, there may be a planning opportunity to delay your 2019 income tax return filing if you would qualify for a rebate check based on your 2018 tax return, but not 2019.
I will continue to send out updates as best I can as the information becomes available. More details are emerging daily. I am watching all this very closely and please know that I am here for you as a resource to talk through any strategies and to help you interpret these various relief provisions. Thank you & stay safe!