COVID Economic Aid Is On Its Way
We reported last week that both the Michigan Legislature and Congress were hammering out details of aid packages, in response to the economic crisis brought on by COVID-19. We shared a glimpse of what might be included in those packages, but we now have more definitive details to share:
Both the Senate and House have passed a $465 million supplemental appropriations package, which is on its way to Governor Whitmer for her signature. The package includes funding for:
- Extension of unemployment benefits to 26 weeks, through March (the usual limit is 20 weeks)
- Small business survival grants, targeting businesses most impacted by the pandemic (administered through local economic development organizations, such as the MBA)
- Continuation of a pay increase for two more months, for direct care workers
- Continuation of additional, daily payment to care and recovery centers
- Pay & hiring of direct care workers
- Grants to entertainment venues
- One-time payments of $1,650 to employees of restaurants and others out of work due to state-ordered closures
- Vaccination operations & testing of vulnerable populations and temporary hospital staffing assistance
- Specified types of congregate living facilities
- Grants for specified teachers
- Stop-gap funding in response to a property tax deferral program
- Extending hospital stays for COVID patients before transferring back to nursing homes or long-term care centers
The bill includes just over $443 from the General Fund and nearly $22 million in federal dollars. With Governor Whitmer’s signature on this bill, which is fully expected, the state will have allocated nearly $4 billion in response to the COVID-19 economic crisis.
A deal has been reached on a $900 billion package, titled the Bipartisan Emergency COVID Relief Act of 2020. Congressional leaders have ushered the votes to passage in both the US House and US Senate, and the package is now headed to President Trump for his signature. This package, which is tied to a $1.4 trillion annual spending package for the federal government through September of 2021, includes these highlights:
Paycheck Protection Program
A revival of the Paycheck Protection Program (PPP); especially hard-hit businesses would be eligible for a “2nd Draw” if they meet these criteria:
- Must have fewer than 300 employees
- Must have used or will use the full amount of first PPP loan
- Must show a minimum 25% reduction in revenue in one of the first three quarters of 2020, as compared to the same quarter in 2019; if applying after January 1st, may use 2020/2019 comparison
- 60/40 cost allocation between payroll and non-payroll costs to receive full forgiveness remains the same for this 2nd Draw
- Maximum available loan amount is $2 million
Tax Issues Resolved
- Gross income does not include any forgivable amount of the PPP loan
- Tax deductibility is allowed for deductible expenses paid by any forgiven amount from the PPP loan
- Eligibility uses of PPP are expanded to include operations expenses (software, human resources, etc.), health and safety expenses related to COVID (PPE, testing, etc.), supplier costs, and property damage as a result of public demonstrations
- Loans less than $150,000 will now require simple certification in the form of a one-page letter from the borrower to the lender, stipulating basic criteria and providing simple, high-level details, to apply for forgiveness
- Return of the Federal Pandemic Unemployment Compensation; the new phase is for $300/weekly, through March 14th; the maximum number of weeks of eligibility extended from 39 to 50 weeks.
- Also returning is unemployment aid to individuals historically ineligible for unemployment benefits
- Funding for vaccines, testing, etc.
- Funding for schools
- Funding for transportation industries (i.e., airlines)
- Stimulus checks of $600 to individuals earning $75,000 or less annually, plus an additional $600 for every dependent child (decreases for those earning over $75,001)
Disagreement over the inclusion of liability protection for businesses, and financial aid to states and cities, stalled the package for weeks. Ultimately, both of these were excluded from the final version of the package.
Small Business Survival Grants – Details to Come
As part of the $465 million package proposed by the Michigan Legislature mentioned above, an allocation of $55 million for Small Business Survival Grants has been approved. Stay tuned for further communications from the MBA regarding eligibility and how to apply.