Negative effects of COVID-19 have yielded questions and concerns about potential aid or relief from the Federal government. How do any of these stimulus opportunities affect you? On March 25th, the Senate responded to these questions by passing the CARES Act, effectively moving forward legislative procedure to provide financial help for damages caused by COVID-19 and required social distancing.
Different industries have different struggles right now and different levels of needs and emergencies. We all know healthcare professionals can be seen atop this list of lacking resources and looking toward the Federal government for relief to come their way. But one thing is not different among individuals and businesses alike, we are all losing money somewhere and in some fashion as a result of this pandemic. With life comes two certainties: death and taxes, and even the funeral home directors and tax accountants are in the midst of suffering in this pandemic. The main parts of the CARES Act that could apply to you starts with the one provision you have most likely heard the most about. That being a $1,200 stimulus check for each qualifying adult and $500 per listed dependent child, up to certain income limits. Individuals whose adjusted gross income was less than $75,000 can expect to receive the full $1,200 payout. Payouts will lessen above these number criteria and exclude individuals earning over $99,000. Married couples who opted for joint filing and reported less than a combined $150,000 should expect to receive somewhere in the range of $1,200 and its double, $2,400. Tax returns that have been filed for 2019 will qualify in terms of determining your level of qualifying for the full $1,200. For those people who have not filed their 2019 tax return yet, their 2018 tax return will be pulled in order to test for qualifying criteria. The lower your income total, the better in terms of what you can expect to receive from this package if qualifying.
Other provisions may impact you in a broader, less individual sense. For starters quantitatively, approximately $250 billion allocated relief on unemployment benefits. From more of a day-to-day standpoint of looking at this number, that is about $600 per week added to unemployment checks over the next four months. Expansion under this provision also covers the self-employed and contractors. Additionally, the program tenure grows 13 additional weeks longer from 26 to 39. At an even larger number than the $250 billion unemployment relief, $500 billion is being placed to relieve struggling businesses, and city and state economies, with an additional $150 billion in direct aid to state and municipal governments. Roughly $60 billion set for airline relief is one example of the other more than $440 billion deemed for businesses.
Specifically on the topic of small business and possible relief, what can we as small businesses expect to see in this bill? Coming in at right under $350 billion in “forgivable loans” is allocation for funding payroll operations and rent fees. Businesses must show compliance in maintaining their employee boarding consistent with where they were before the pandemic. On top of that an additional roughly $221 billion in tax breaks for qualifying businesses. With visible growing concerns for healthcare resources, $117 billion in hospital and veteran care relief is included. This is a part of $340 billion in miscellaneous “other” spending in relief funds. Unemployment rates are rising and have no sign of stopping for the time being. How much unemployment can we expect in our economy as a result of social distancing amid the pandemic? A lot more than we have now? Along with previously mentioned $1,200 lump sum cash payments for individuals, insurance benefits for unemployment will see a spike from the regular average 40% coverage of lost income up to a range of 80% through Summer.
From a less quantitative approach, this relief package should help close the loss of income drop for Americans whose business practices have suffered as a result of social distancing amid COVID-19. While buying the American people some time in terms of economic standing, the markets will note this reduction of overall risks. Quick action in policy should continue the markets and help a majority of businesses and family households. With over $6 trillion in planned allocated funds in policy now, the Fed has made their statement as the liquid stabilizer of a recovering economy.