The Treasury’s latest proposal for dealing with the economic dislocation caused by the coronavirus pandemic allocates more than $1 trillion in spending, including secured loans or loan guarantees for certain hard-hit industries.
The plan includes both direct payments to individual households, as well as financial support to allow small businesses to continue to pay their employees.
The details are as follows:
Economic Impact Payments
- As in past similar programs, payments will be determined and administered by the IRS and the Bureau of Fiscal Service (also an arm of the Department of the Treasury)
- There will be two rounds of direct payments to individual taxpayers:
• $250 billion to be issued beginning April
• $250 billion to be issued beginning May 18
- Payment amounts would be fixed and tiered based on income level and family size
- Each round of payments would be identical in amount
Small Business Interruption Loans
- To provide continuity of employment through business interruptions, this provision would appropriate $300 billion for a small business interruption loan program
- The U.S. government would provide a 100% guarantee on any qualifying small business interruption loan
- Qualifying loan terms:
• Eligible borrowers: Employers with 500 employees or less
• Loan amounts: 100% of 6 weeks of payroll, capped at $1540 per week per employee (approx. $80,000 annualized)
• Borrower requirement: Employee compensation must be sustained for all employees for 8 weeks from the date the loan is disbursed
Of course, Congress would have to enact legislation to authorize and fund these programs and there are details and procedures that still have to be developed. We will continue to monitor the progress of this proposal and communicate with you as soon as we have something to report.
And, of course, we at Friedman LLP hope that you and yours are well and staying safe.