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The Expediter’s Guide to the $2-Trillion COVID-19 Stimulus Package
The two-trillion-dollar “Coronavirus Aid, Relief, and Economic Security Act” (or the “CARES Act”) was signed into law on March 27, 2020. Now it’s time to unpack it.
What provisions in the COVID-19 stimulus bill apply to you as an expedite owner-operator, driver, fleet owner, trucking carrier—or whatever your role is in the industry?
Here’s a list of 10 key provisions in the bill—5 for individuals and 5 for businesses—with links to the original sources to help you sort through what types of relief might be available to you to protect your business and your financial future.
Part 1: Relief and Resources for Individuals
1. Economic Impact Payments
Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples and up to $500 for each qualifying child.
But there’s a caveat. The more income you make, the less you will receive—if you receive anything.
For example, tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. But for filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds.
Therefore, single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible for Economic Impact Payments.
2. Relief for Qualified Renters
If you live in a rental property during your “home time," the bill provides a temporary moratorium on evictions and late fees for nonpayment of rent or other charges for 120 days starting on March 27, 2020.
Landlords would not be allowed to issue a notice to vacate until after this temporary moratorium, and they would not be allowed to require a tenant to vacate the unit until 30 days after the notice is given.
However, the moratorium only applies to evictions for nonpayment of rent, not for other causes.
Also, while you may be protected from eviction proceedings temporarily under this bill, the bill does not treat nonpayment of rent during this period as forgiven. This means that the unpaid amounts will accrue during this period, even if fees are not assessed.
3. New Exceptions for Early Withdrawal from Retirement Funds
If you have a retirement account, the stimulus bill creates new exceptions that allow 401(k) and IRA owners affected by the pandemic to tap into their retirement accounts early, without the 10-percent early withdrawal penalty for qualified account owners under age 59-and-a-half.
You will still be required to pay taxes on the withdrawal. However, you’ll be allowed to pay the tax owed on the distribution over three years, instead of having to pay the full amount of taxes owed in the tax year of the distribution. By paying over three years, you can spread the taxes due on the distribution over multiple tax years, which may keep you in a lower bracket and allows you to defer payment over time.
The new law increases the dollar amount you can loan yourself from your own 401(k) from $50,000 to $100,000. Also, it creates a penalty-free early distribution rule so that IRA or 401(k) account owners under can take a penalty-free retirement account distribution of up to $100,000.
All retirement accounts fall under this rule, including IRAs, Roth IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, pension plans, 457 plans, and 403(b) plans.
You can make multiple payments back to the account or one lump-sum payment to the account by the end of the three-year window. This option allows those who can get back on their feet financially to return the funds to their retirement account. And if you do, you’ll avoid any taxes on the distribution.
The penalty-free distribution option is available on qualifying distributions made from January 1, 2020, to December 31, 2020.
As with any tax-related decisions, consult your tax/ accounting professional to determine the best path forward in your situation.
4. Relief for Homeowners
If you own a home with a federally backed mortgage, you may be eligible for assistance under this bill.
Federally backed mortgages are defined as mortgages for single-family homes that are:
- Purchased or securitized by Fannie Mae or Freddie Mac;
- Insured by the Federal Housing Administration (FHA), including reverse mortgages or Home Equity Conversion Mortgages (HECMs);
- Guaranteed, directly provided by, or insured by the Department of Veterans Affairs (VA);
- Guaranteed, directly provided by, or insured by the Department of Agriculture (USDA); or
- Guaranteed under HUD’s Native American or Native Hawaiian Home Loan Guarantee programs.
If you’re not sure whether your mortgage fits this definition, reach out to your mortgage servicer (the company that you send your mortgage payments to each month) to find out.
Keep in mind that even if you're given the option to defer mortgage payments for a certain period, you'll still be required to make up those payments, which may put a more significant financial burden on you in the future. So, find out the precise payback terms from your mortgage provider before deciding whether to accept relief in this provision.
5. Student Loan Relief
If you’re still carrying any student loan debt, your payments will automatically stop from March 13, 2020, through September 30, 2020, which allows you to temporarily stop making your monthly loan payment. But you can still make payments if you choose.
Part 2: Relief and Resources for Businesses
6. Paycheck Protection Program (PPP)
This program provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency.
If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, while helping affected small businesses stay afloat and weather the crisis.
Here are the key features of PPP:
- Forgiveness of up to 8 weeks of payroll based on employee retention and salary levels
- No SBA fees
- At least six months of deferral with maximum deferrals of up to a year.
- Loans are available through June 30, 2020.
One key challenge, however, is being able to apply for the loan. High demand for the PPP loans has put a massive strain on the bank and SBA technical capabilities to process the loans in recent days. See this article: https://www.nbcnews.com/business/business-news/outages-delays-mar-new-small-business-loan-program-n1178096.
7. Economic Injury Disaster Loan Emergency Advance
These grants provide an emergency advance of up to $10,000 to small businesses harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL).
To access the advance, first, apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance and may be used to keep employees on the payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions or pay business obligations, including debts, rent, and mortgage payments.
8. SBA Express Bridge Loans
Express Bridge Loan Pilot Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.
This loan can help overcome the temporary loss of revenue you might be experiencing and can either be a term loan or used to bridge the gap while applying for a direct SBA Economic Injury Disaster Loan.
9. SBA Debt Relief
This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans.
Under this program, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
10. Small Business Counseling and Training
If you, like many small business owners, need a business counselor to help guide you through this uncertain time, you can turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter.
These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support small business owners with counseling and up-to-date information regarding COVID-19.
More info: https://www.sba.gov/local-assistance/find/