COVID-19 has had an unimaginable impact on nearly every aspect of daily life for consumers and businesses alike around the world. Currently, the disease shows no sign of slowing down, and the concern for how this will impact American lives and businesses continues to grow. With the rising concern of the economy, the U.S. Congress has responded in a big way, negotiating a historic, bi-partisan $2 trillion stimulus package in hopes of breathing life into our struggling economy.

The stimulus package will offer relief to consumers and businesses alike, and like most legislation, can be complex, so we’ll outline some of the major provisions that will impact businesses in today’s blog post.

What is included in the stimulus package?

The Coronavirus Aid, Relief and Economic Security (CARES) Act, is the largest economic stimulus package in modern history. The bill includes $2 trillion in tax provisions and other stimulus measures, including emergency business lending. The infusion of cash promises to provide assistance for struggling American businesses and families, as well as healthcare workers that are standing on the front lines of the battle against COVID-19.

The overall package is broad and includes significant tax incentives and relief for businesses, but here is a list of the most significant provisions that could affect your business:

  • $367 billion in loans will be made available to small businesses. The loans will be forgiven as long as the recipient businesses do not lay off their employees.

    • Loans are available for small businesses with 500 or fewer employees

    • Loans are available through June 30, 2020

  • $150 billion in loans will be made available to state and local governments. The loans will be forgiven as long as the municipalities do not lay off their employees.

    • $8 billion will be set aside for local governments

  • If a small business is forced to close or if they have seen gross receipts fall by 50% from the previous year, they will be eligible for a tax credit worth up to 50% of wages paid during the crisis, as long as they do not lay off their employees.

    • Wages would remain eligible for the tax credit until the business is no longer suspended or gross receipts for a quarter reach 80% of the prior year.

    • This credit applies to businesses with fewer than 100 employees

    • The benefit is capped at $10,000 in wages per employee for larger companies

  • $500 billion in loans will be distributed to struggling industries such as passenger airlines and businesses critical to maintaining national security. An oversight board will be implemented in order to oversee the distribution of loans to large corporations.

  • Healthcare providers will obtain $100 billion in grants to assist in the fight against the coronavirus and make up for lost revenue from delayed elective surgeries and procedures.

  • In an effort to free up hospital beds, $200 million will be granted to the Federal Communications Commission to provide healthcare providers with the necessary technology to facilitate telemedicine services. An additional $25 million will go to a grant program that assists rural communities purchase broadband equipment for telemedicine.

  • The Commodity Credit Corporation, an organization that helps stabilize the farm economy, would have its spending authority increased to $14 billion. In addition, the stimulus package includes a $9.5 billion emergency fund for food producers, fresh fruit and vegetable growers, cattle ranchers, dairy farmers, and local food systems such as farmer's markets.

  • School districts, colleges, and universities will receive over $30 billion.

  • A $10 billion Treasury loan to the U.S. Postal Service to stave off insolvency.

  • Restauranteurs, hotels, and retailers can immediately deduct expenses used on property improvements.

  • Businesses can defer the 6.2% tax that they pay on wages used to fund Social Security.

There’s no doubt, the stimulus package will have a significant impact on the U.S. economy as it places money in the hands of individuals, small businesses, and industries that have seen the biggest negative impact of the economic downturn due to the pandemic.

This material was adapted from content produced by Zywave. It is provided for information only. It is not intended as legal or tax advice. You should consult your legal counsel or tax advisor for advice specific to your business situation.