Legislative / Policy Update
Money Out the Door. With the March 27 enactment of the CARES Act, how quickly will funds in the Act be made available to individuals and businesses?
For individuals, the legislation provides direct payments of $1,200 for single persons, $2,400 for married couples, and $500 for children under 17. The payments are phased out for individuals with income above $75,000 and couples with income over $150,000. The IRS plans to issue as many payments as possible via direct deposit based on a 2019 or 2018 tax return or 2019 Social Security statement. If the IRS does not have a taxpayer’s bank account information, the taxpayer should look for a letter from the IRS detailing how to receive the payment.
Treasury Secretary Steve Mnuchin said he hopes IRS will be able to provide payments within three weeks for those persons with direct deposit information on file with the IRS. On Sunday, Mnuchin said, "We will create a web-based system for people where [if] we don't have their direct deposit [information], they can upload it, so that they can get the money immediately as opposed to checks in the mail." Payments sent via check could take a few months.
For small businesses, $350 billion will be available through a new SBA Paycheck Protection Program. Treasury Secretary Mnuchin said today he expects instructions will be released today on how small businesses can apply for loans available under the CARES Act. He expects the loans to be available starting Friday. The process, he said, will be "very simple," and small-business owners will be able to go to existing SBA lenders as well as banks, credit unions and financial-technology lenders to apply. The loans are designed to cover eight weeks of a business's payroll, and a business can receive a loan of up to $10 million under the program. If employers maintain their payroll, the loans would be forgiven.
For large businesses, the Act provides $500 billion in loans and loan guarantees divided into four categories: (1) $25 billion for passenger airlines, (2) $4 billion for cargo air carriers, (3) $17 billion for businesses critical to maintaining national security, and (4) $454 billion for eligible businesses as well as states or municipalities. The Act provides that no later than 10 days after enactment, the Treasury Secretary shall publish procedures for application and minimum requirements.
The Act also provides that $32 billion is provided for grants “for immediate financial assistance to support employee wages, salaries, and benefits.” The grants are divided into three categories: (1) $25 billion for passenger air carriers, (2) $4 billion for cargo air carriers, and (3) $3 billion for airline contractors, such as catering service providers. No later than five days after the date of enactment, air carriers and contractors should submit their requests for financial assistance, and no later than 10 days after enactment, the Treasury Secretary will make initial payments.
Phase 4. The House and Senate are not planning to meet again in regular session before April 20, but lawmakers have already begun to discuss what could be in the next coronavirus package. Areas of bipartisan agreement in this Phase 4 legislation could include additional funds for state and local governments, infrastructure investments, and steps to stabilize multi-employer pension funds.
House Speaker Nancy Pelosi has said one of her priorities in the next bill will be another round of cash payments for individuals. Other Democratic priorities include more funding for personal protective equipment, free treatment for COVID-19 patients, stronger worker protections for healthcare workers and first responders, and expanding the pool that qualifies for family and medical leave to include those caring for a parent infected by COVID-19.
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