The coronavirus stimulus package has passed. What does it say?

Updated Jan 29, 2021

After days of intense debate in the U.S. Senate and an evaluation period in the House of Representatives, Congress passed the largest economic stimulus package in American history Friday. President Trump signed the bill into law the same day, formally introducing the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

With more than $2 trillion allocated to American workers and businesses, legislators and the President hope the CARES Act can serve as an economic lifeline for the nation, providing immediate relief to suddenly unemployed workers and stabilization for businesses and industries that have been uprooted by COVID-19 coronavirus pandemic as it has spread across the globe.

The headlining feature of the stimulus package is its direct cash payments to the American workforce.

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Under the instructions of the new law, American workers earning less than $75,000 per year (based on 2018 or 2019 tax returns) will receive a one-time cash payment of $1,200 from the government. That payment can be doubled for married couples filing jointly (with combined earnings below $150,000), while qualifying children 16 and under are due to receive $500. Workers earning between $75,000 and $99,000 also will receive a cash payment, though those payments are to phase down the higher a person’s earnings within that threshold — couple earning restrictions are again capped (at $198,000).

Another key feature of the CARES Act is its enhanced unemployment insurance. All American workers receiving state unemployment insurance also will receive an additional $600 per week from the federal government for up to four months. Lawmakers also have extended unemployment benefit eligibility by 13 weeks, funded entirely by the federal government, while other provisions exist in the law to assist partially employed, self-employed, independent contractors and gig economy workers.

Small businesses also will receive key assistance under the new law.

The CARES Act enables the U.S. Treasury to provide $377 billion in guaranteed loans for small businesses. The law allocates $10 billion for $10,000 grants to cover immediate operating expenses, $17 billion to be offered as six months of debt relief for existing loans and nearly $350 billion to the Small Business Administration (SBA) to be used for loans of up to $10 million per business (up to 500 employees). The CARES Act states any portion of the SBA loans used to cover payroll support, employee salaries, mortgages, rent, utilities and debt obligations can be forgiven, provided workers remain employed through June; it also directs the SBA to waive pre-payment penalties and reduce fees on these loans as much as possible.

Larger businesses and corporations hindered by the pandemic have access to up to $500 billion in loan assistance — $46 billion for air carriers and businesses in national security and $454 billion for other entities.

Regarding the latter, the CARES Act instructs the Treasury to ensure businesses of 500 to 10,000 employees and non-profit organizations are provided access to specific loans of not higher than 2 percent per year with no payments due for at least six months. This provision requires the borrower to prove the funds are necessary to support ongoing operations and that the borrower will retain 90 percent of its workforce through September and will not offshore workers for two years after repayment of the loan.

For the purposes of workforce size, the law states “the average number of full-time equivalent employees shall be determined by calculating the average number of employees for each pay period falling within a month.”

Employers also are eligible for a 50 percent refundable payroll tax credit on wages paid up to $10,000 due to the pandemic. The law states the credit is available for companies whose businesses were disrupted due to the public health crisis and experienced a decrease in gross receipts of 50 percent of more compared to the same quarter last year. The credit can be claimed for employees who are retained or not working due to the crisis for business with more than 100 employees, and for all employees for businesses with fewer than 100 employees.

Other key features of the law include $100 billion for hospitals and medical businesses battling the pandemic and the temporary suspension of student loan interest (through September).

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