Congress passed a $2 trillion stimulus package, the Coronavirus Aid Relief, and Economic Security (CARES) Act. The CARES Act application process is now online. Not only does the Act cover benefits for small business (less than 500 employees), but, also, expands unemployment, particularly for independent gig and 1099 contractors under the Family First Coronavirus Response Act (FFCRA). 

$349 billion in loans has been set aside for small businesses through the Small Business Administration in the form of a “Paycheck Protection Program.” These funds are separate from the $50 billion in SBA loans put into law several weeks ago. Another $454 billion will be administered by a new lending agency managed by Treasury Secretary Stephen Mnuchin. 

Qualifying small businesses must go to their local FDIC-insured bank to get the process started. The application process is simple. Businesses facing bankruptcy will have a separate program, in which they can participate to retrieve their assistance. 

Small businesses can obtain a loan covering 2.5 payroll that does not exceed $10 million. If your payroll is $20,000, you can get $50,000. Payroll above $100,000 for any individual employee is not covered. The loan can be used for debt obligation, mortgage interest, rent payments, utility payments, and payroll support. Businesses are eligible for loans through December 31, 2020.

Borrowers are eligible for loan forgiveness equal to the amount spent during an 8-week period after the origination date of the loan on payroll costs, mortgage interest, rent or utilities. Employers must maintain the same employment level as of March 13, 2020 during the duration of the loan. Small businesses that maintain their employees during the crisis or rehire those employees will have their loans forgiven by the federal government. 

The CARES Act includes $17 billion to cover six months of payments for small businesses that have taken out SBA loans prior to the coronavirus outbreak, but now face difficulty making those payments.

Unemployment, for instance, is expanded an additional 13 weeks under the pandemic emergency unemployment compensation act. For business owners, the main program is the Paycheck Protection Program, which will be administered by the banks and other financial institutions. 

In addition to the CARES Act, there are different economic development programs at your state and local levels. 

The CARES Act follows the SBA guidelines, with a few nuances. Be sure to get your company documentation in order:  your articles of incorporation, your bylaws, your operating agreements, and your certificates of Good Standing.

Originally, the assistance would be given out based on tax returns, but that has since been contested and will be instead based on social security. They’ll want you to beg for it. This will be first come, first serve. So, you’ll need to get your ducks in a row. Even though it is called the Paycheck Protection Program, many companies will be able to apply up to $10 million. The money will cost 4% per annum––a great rate.

There are limitations. You need a payroll. The loan is forgivable, if you keep your employers on or use the funds to pay your company’s mortgage rent utilities, insurance programs, and other debt obligations. It might not be easy for small businesses to get their assistance. 

As for the $1,200 in funds to Americans, we won’t see that until May, if you have direct deposit with the IRS. If not, then you’re likely looking at Q1 2021. The same goes for the Paycheck Protection Program. 

Direct payments will be distributed based on adjusted gross income reported on an individual’s or couple’s 2018 and 2019 tax returns. Most adults making less than an adjusted gross income of $75,000 annually receive a $1,200 one-time payment. Payments go out to individuals whose income is as much as $99,000, though those earning more than $75,000 won’t receive the entire amount.

Married couples without children receive a total of $2,400 if their joint income is under $150,000 annually. Those earning as much as $198,000, but those earning more than $150,000 won’t receive the entire amount. 

Households with children earn $500 each per child if the parent’s income qualifies for these payments and if the child is under the age of 17. Taxpayer filing as “head of household” in the past receive the full $1,200, if their income is less than $112,500. There are exceptions, such as adults claimed as dependents by other adults, who are not eligible for the payment nor households with members who are unauthorized immigrants.

This text has been adapted from comments on our weekly Genius Wednesdays. Be sure to join the CoinGenius Discord channel today for a constant stream of market analysis and economic insights.

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