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Help is On the Way; Senate and White House Reach Deal on Phase 3 of COVID-19 Response

March 25, 2020

Today, the Council of Insurance Agents and Brokers briefed Conner Strong & Buckelew’s leadership team on Federal Relief efforts that will help our clients.  All 3 phases of relief are outlined in the powerpoint available here.

Although Congress is still preparing the language of the bills related to Phase III that will be voted on as early as tonight, here is a summary of available relief in Phase III:

  • Recovery checks of $1,200 for individuals with AGI up to $75,000 or $112,500 for those with a head of household filing. All joint filers, with AGI up to $150,000 are eligible for $2,400. Those amounts increase by $500 for every child
  • $600 maximum unemployment benefit per week (“ensures laid-off workers receive full pay for 4 months”)
  • $58 billion for airlines – prohibited from stock buybacks and CEO bonuses
  • $150 billion Marshall Plan for hospitals
  • Additional $349 billion in loans for small businesses to cover payroll and other expenses – bans stock buybacks for the term of the government assistance plus 1 year for any company receiving aid
  • Retention tax credit for employers to encourage businesses to keep workers on their payrolls
  • Waiving penalties for withdrawing as much as $100,000 from retirement plans
  • Technical corrections and other changes to 2017 tax overhaul
  • Several modifications to the emergency leave programs in the second package
  • Creates Treasury Department Special Inspector General for Pandemic Recovery

It is our understanding that the Small Business Loans will be administered through banks.  Here is a summary of the relevant points:

  • Allows SBA to provide federally-backed loans from February 15, 2020 to June 30, 2020 to eligible businesses to cover operational costs, including payroll, rent, health benefits (and insurance premiums), etc.
  • No collateral, personal guarantees, or subsidy recoupment fees required (interest rate set at 2/15/20 level)
  • Eligible businesses = 500 or fewer employees
    • Leeway for businesses with multiple “small” locations that provide accommodation and food services
    • Sole proprietors, independent contractors, and self-employed individuals are eligible
    • Some relief from SBA affiliation rules for certain businesses
  • Two eligibility criteria = good-faith certification of need for the loan + agree to not fire workers
  • The maximum loan amount is a multiplier (2.5x) of average monthly payroll costs up to $10M cap
  • Businesses can use loans for almost all operating costs (with limits on individual comp above $100K, comp for non-U.S. workers, and “double dipping” for Families First paid leave wages already receiving credit)
  • Debt forgiveness up to the principal loan amount for certain costs incurred during the covered period
    • Forgivable amounts = payroll costs; interest payments on loan obligations; rent; and utilities
    • Forgiveness amounts reduced for firing employees or cutting wages

Conner Strong & Buckelew will continue to provide updates as they become available.

Click here for a printable download.

 

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FILED UNDER:

Employee Benefits, Executive Risk Management