What the $900B COVID-19 Relief Package Means for Detroit Regional Chamber MembersDecember 22, 2020
In a Monday evening call with business and chamber leaders from across the country, Neil Bradley, chief policy officer of the U.S. Chamber of Commerce, outlined what key provisions of the bill would mean for various sectors of the economy.
“With the exception of failing to include liability safe harbors, which we are absolutely committed to fighting for and achieving when the new Congress is in session January, a lot of the priorities we have talked about are included in the bill,” said Bradley.
The $325 billion allotted to help small businesses includes $284 billion for first and second forgivable Paycheck Protection Program (PPP) loans. The bill also includes $20 billion for Economic Injury Disaster Loans. The PPP funding will run through March 31 or until the money is exhausted. Similar to the CARES Act in the spring, funds will be distributed through the Small Business Administration and loaned to businesses through banks.
One critical provision that many Detroit Regional Chamber members were interested in is clarifying how PPP loans would be taxed. Under the new legislation, PPP funds are not classified as taxable income, and expenses paid for through loans are also tax-deductible. This provides a great deal of clarity for business owners entering tax-season.
The updated PPP legislation also expands on how a business can spend money. While 60% of the loan still must be for payroll to ensure forgiveness, businesses can also use funds to pay for business expenses because of the pandemic.
The legislation extends benefits to the unemployed to 50 weeks, and those eligible would receive a $300-a-week federal unemployment subsidy. As with the prior aid package enacted in March, gig workers and others who don’t ordinarily qualify for benefits would be eligible for the jobless aid. The money is available through March 14. Most states typically provide 26 weeks of jobless benefits, which can be claimed through both state and federal programs under the bill. The cost of the enhanced unemployment benefits is projected at $120 billion.
The legislation authorizes a $600 direct payment to all eligible individuals with a gross adjusted income of $75,000 and married couples over $150,000. Qualifying households would also receive an additional $600 per dependent, up to $2,400. Treasury Secretary Steven Mnuchin said Monday that the first electronic payments could reach bank accounts by the beginning of next week.
States and federal agencies would receive more than $30 billion in funding for vaccine distribution. The bulk of that money would go to the procurement of vaccines and therapeutics by the Biomedical Advanced Research and Development Authority. An additional $9 billion would go to the Centers for Disease Control and Prevention and states to further distribute the vaccine. States would receive $22.4 billion for testing, tracing, and COVID-19 mitigation programs.
In an attempt to address the troubled public health history of vaccines for communities of color, $300 million is being directly targeted to support at-risk populations.
The bill provides $25 billion of assistance to tenants in arrears on their rent. It also extends until the end of January 2021, a federal eviction prohibition, which the incoming Biden administration may extend. The Treasury Department would be responsible for dispersing the rental assistance to states via a formula based on population. Landlords and building owners can apply on behalf of tenants meeting the eligibility requirements; generally, those who make less than 80% of median income in their area, have at least one person in their households who has lost a job and can demonstrate they are at risk of losing their home.
The bill provides $82 billion for public and private K-12 schools, as well as colleges. Of that, the bulk would go to a $54.3 billion fund for public schools, $22.7 billion would go to public and private higher education, and $1.7 billion is set aside for historically Black, Tribal, and Hispanic-serving colleges and universities.
The bill would provide $12 billion in support to small lenders focused on low-income and minority communities, buttressing minority-owned banks and firms known as community financial development institutions.
The bill sets aside nearly $17 billion for airlines, which will help tens of thousands of employees return to work through the end of March. The bill also sets aside $14 billion for local transit systems. This is a critical injection to public transportation systems around the country, many of which were considering major cuts in service and layoffs. Finally, the bill includes $1 billion in relief funds to Amtrak, $2 billion for the bus industry, and $10 billion for state highways.
The President is expected to quickly sign the bill into law before Christmas so that direct aid payments can start to go out in the coming days. While the bill does not contain every provision the Detroit Regional Chamber hoped to see, it is a significant step to stabilize the nation’s economy as the COVID-19 pandemic continues to spread. Over the coming days and weeks, the Chamber will continue to provide insight on what the bill means for Michigan businesses and residents.