COVID-19 Update: First Glance at the Stimulus Bill

The third and largest COVID-19 aid bill is a stimulus package designed to help the ailing economy and ease the burden on families and workers. At over $2 trillion dollars, there is simply nothing in our past to compare it to as we move further into uncharted territory. 


The Senate and the administration have been collaborating closely with House leadership over the previous weeks in a bid to ensure smooth, quick adoption of the Senate bill once it clears that chamber. Of course, we cannot be certain that will be the case, so please take all of that into consideration when reading the information below.


For Businesses

A series of tax credits to ease the burden of keeping staff on payroll.

  • Employee retention benefit: 50% refundable payroll tax credit during COVID-19 crisis for businesses that either fully or partially shut down OR have a 50% decrease in receipts versus the same quarter in the previous year and continue to pay employees.
  • Based on qualified wages paid to employees during crisis, tied to number of employees (100+ full time employees = wages paid when they are not providing services due to COVID-19 and less than 100 full time employees = wages paid regardless of business closure status)
  • Covers up to $10,000 paid per employee, including benefits, for the period 3/13/20-12/31/20
  • Payroll tax deferred, payments to be spread over 2 years​
  • Net operating losses (NOLs) modification: NOLs arising in FY's '18, '19, and '20 can be carried back 5 years
  • AMT credits available as refundable credits through 2021 can be claimed as a refund now
  • Allowable deductible interest expenses are increased from 30% to 50% for 2019 and 2020.


For Employees


Cash payments to U.S. residents

  • All U.S. residents with an adjusted gross income of up to $75,000 for individuals and $150,000 for couples will receive a cash rebate of $1,200 (ind) or $2,400 (couples)
  • Includes all taxpayers with work-eligible SSN, including those with low or no income
  • Rebate amount decreases by $5 with for every $100 over the threshold, with individuals AGI over $99,000 completely phased out, $146,000 for head of household with at least 1 child phased out, and $198,000 for couples phased out.
  • An additional $500 will be given for each child per household.


Unemployment Insurance

The stimulus bill offers considerable resources related to unemployment insurance. At present, this section includes final sticking points that are delaying passage of the bill.

  • Creates a temporary Pandemic Unemployment Assistance (PUA) program for those not traditionally covered by unemployment insurance (UI), including the self-employed, independent contractors, or those with limited work history
  • Provides an additional $600 per week in recipients of UI and PUA for up to 4 months
  • Provides an additional 13 weeks of UI after state UI expires
  • Federal government will cover 100% of the cost of the first week of UI if states waive the 1 week waiting period to begin benefits
  • Federal government will reimburse states for 50% of the costs incurred through 12/31/20 of unemployment benefits for state agencies and non-profits
  • Federal government will pay 100% for 'short-time' programs in states with existing programs in law and 50% of costs for states that begin 'short-time' programs during the covered period


Small Business Administration Programs for Businesses

The Small Business Administration is receiving an enormous amount of funding and significant program adjustments to help small businesses weather and survive the crisis. A sample of the numbers includes:

  • $349 billion for loan guarantees, 
  • $675 million for Small Business Administration salaries and expenses,   
  • $240 million for small business development centers and women's business centers for technical assistance for businesses,  
  • $10 billion for emergency EIDL grants,  
  • $17 billion for loan subsidies,  
  • $100 billion for secondary market guarantee sales 


Programmatic changes appear to be primarily channeled through the 7(a) loan program. Key provisions include:


Paycheck Protection Program 

  • Creation of the Paycheck Protection Program (PPP)
  • Helps small businesses, 501(c)(3)'s, 501(c)(19)'s, and 31(b)(2)(c)
  • Limited to under 500 employees
  • Includes independent contractors, sole proprietors and the self-employed
  • Entities must have been operational by 2/15/20; had payroll, paid taxes
  • Covered loan period is 2/25/20 through 6/30/20
  • Maximum loan amount via 7(a) set to $10 million through 12/31/20
  • 100% loan guarantee through 12/31/20 
  • Eligible expenses include payroll, insurance, rent, mortgage and utilities
  • Borrower cannot apply/carry both PPP and Economic Injury Disaster Loan (EIDL) for COVID-19, but can carry previous, non-COVID-19 EIDL and participate in PPP
  • Borrow must good-faith certify that funds are needed for COVID-19 related purposes, the funds will be used to retain workers, and that their request is not duplicative with other SBA funds for the same purpose 
  • Waives borrower and lender fees
  • Waives credit elsewhere requirements
  • Waives collateral and personal guarantees
  • Sets maximum interest rate of 4%
  • No prepayment fees
  • Defers payments on PPP loan for 6-12 months
  • Delegates authority to all existing 7(a) lenders to expedite approvals/distributions
  • Authorizes bank and non-bank lenders to participate in PPP program
  • New lenders in program can only participate in PPP and not other 7(a) loans
  • Amount spent by borrower in the first 8 weeks from loan origination may be forgiven; amount reduced proportionate to reductions in workforce as compared to previous year; if rehires made during 8 week period, no penalty in reflection of possible layoffs early in the 8 week period
  • Allows inclusion of additional money paid to tipped workers
  • Anything not forgiven or repaid by 12/31/20 will convert to a max 10 year loan at a max 4% interest rate; loan will remain 100% guaranteed


Emergency Injury Disaster Loan (EIDL)

  • Eligibility expanded to include tribal businesses, cooperatives, ESOP's, individual contractors, sole proprietors, and private non-profits with less than 500 employees
  • Waives credit elsewhere requirement for advances and loans below $200,000
  • Waives personal guarantee for advances and loans below $200,000
  • Waives 1-year-in-business requirement for advances and loans below $200,000
  • SBA has greater flexibility in determining borrower eligibility
  • Entities eligible to apply for EIDL may request an advance in the form of an emergency grant of up to $10,000
  • SBA must distribute EIDL emergency grant within 3 days
  • Applicants are not required to repay emergency grant, even if they are ultimately denied EIDL


As you can see, this bill is massive in both funding and scope. A fourth aid bill is all but certain to come in the weeks ahead, with additional funding and program fixes and adjustments. IEDC will continue to engage Congress and the administration throughout this crisis. Please continue to engage your elected officials on the importance of a swift, substantial and sustained federal response to this crisis. 


Please contact Mike Gray at or (605) 595-4243 to report conditions at your operations and inquire about available resources.


Stay healthy and stay safe!


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