THE CARES ACT
A landmark stimulus package known as the CARES act was passed by Congress and signed into law on March 27, 2020. It provides expanded benefits to individuals and businesses hit by the financial crisis. Below is some information for individuals, the unemployed, small business owners, and veterans.
INDIVIDUAL BENEFITS
- $1,200 to individuals who made up to $75,000. $2,400 for married couples. $500 for each qualifying child.
- The payments phase out after you meet the threshold of $75,000 individually or $150,000 jointly, but you will still receive a partial payment until you have income individually exceeding $99,000 or jointly exceeding $198,000.
- You must have filed taxes in 2018 or 2019.
- If you owe back taxes, you will still receive a relief payment.
- If the IRS does not have your direct deposit information, a check will be sent by mail but this could take several weeks.
UNEMPLOYMENT
WHO QUALIFIES?
Unemployment benefits have been expanded under the CARES Act to include:
- Part-time workers and self-employed workers
- Gig workers and contractors
- Anyone out of work or who has had to cut back on their hours directly due to COVID-19 including if you had to stop working because you have symptoms or are caring for someone who has the virus
- People who can’t get to their jobs due to the virus
- People who previously wouldn’t have qualified due to a spotty work history
WHO DOES NOT QUALIFY?
Anyone working from home before COVID-19 or receiving paid leave
WHAT WILL I NEED TO FILE?
- Social Security Number
- Driver’s License Number
- Mailing address
- Telephone number
- If you are not a US citizen, your alien registration card number
- Full company names and address of everywhere you’ve worked for the past 2 years
- For federal employees, copies of forms SF8 or forms SF50
- If you are a service member or ex-service member a copy of separation form DD 214
- If you want direct deposit, you must have your bank routing and checking account numbers
- First and last day working with employer
- Reason you left
HOW MUCH COMPENSATION WILL YOU GET?
- $600/wk has been added on top of how your state calculates your benefits and an additional 13 weeks of benefits
- Compensation varies by state: Unemployment Benefits Finder
Filing in MI
General overview: Unemployment Benefits
File a claim online: Filing an Initial Claim
File a claim by phone: Contact UIA
Updates on how MI is handling unemployment in relation to COVID19
FOR BUSINESS OWNERS
ECONOMIC INJURY DISASTER LOAN (EIDL)
Who qualifies: Tribal businesses, cooperatives, ESOPs w/ fewer than 500 employees, private non-profits, and individuals operating as sole proprietors or independent contractors, Veteran organizations
- Expands eligibility to include businesses that have been open for less than a year
- Determination is no longer dependent on businesses projected ability to pay back loan but is based on credit scores or alternate appropriate testing
- Covered period: January 31, 2020-December 21, 2020
GRANT WITHIN THE EIDL APPLICATION PROCESS: Applicants may request an advance on the loan in the form of a grant of not more then $10,000 that the SBA must distribute within 10 days.
REPAYMENT OF THE GRANT IS NOT REQUIRED. Must be used only for the following: to provide sick leave to employees, maintain payroll, rent, mortgage, to repay obligations or increased costs to obtain materials
Sources: NAV.com | Benefits.gov | SBA.gov
PAYMENT PROTECTION PROGRAM (PPP)
Eligibility: Small businesses, 501(c)(3) nonprofits, a 501(c)(19) veteran’s organization, or Tribal businesses that have no more than 500 employees or the applica- ble size standard as provided by the SBA. Also includes sole-proprietors, independent contractors, and self-em- ployed individuals.
- Covered period: Feb 15, 2020-June 30, 2020
- $349 billion in funding
- Zero-fee loans up to $10 million through Dec 31st · 8 weeks of average payroll + other costs forgiven if business retains its employees and their salary levels
- Principal & interest deferred for up to a year, all borrower fees waived.
If you have an EIDL loan related to COVID-19, you can still apply for a PPP loan and refinance the EIDL loan into the PPP loan. The EIDL grant award of $10,000 would be subtracted from the amount forgiven under the PPP. EIDL borrowers not affected by COVID-19 can also apply for a PPP loan but cannot refinance into a PPP loan.
The Credit Elsewhere requirement has been waived
Sources: US Treasury | JJ the CPA (Video) | Evergreen Capital (Video)
EIDL VS PPP: WHICH SHOULD YOU APPLY FOR?
Generally, if you are trying to retain employees and cover costs of payroll and benefits, the Payment Pro- tection Program is probably for you. The main take- away is that it is based on payroll so it incentivizes retaining employees and the amount from the loan spent on payroll, rent, mortgage and other relevant expenses in the first 8 weeks will be forgiven up to 100%. No more than 25% of the forgiven amount can be for non-payroll costs. You get the PPP from individual banks instead of the SBA. 10 year term, 4%.
The EIDL loan comes from the SBA. None of the loan is forgivable but there is a $10,000 advance option that does not require repayment. The loan term is up to 30 years with interest rates at 3.75% for businesses and 2.75% for non-profits. This is a better option if your payroll is not significant as it is not mainly based on your payroll.
Sources: StrandLife Financial (Video) | JJ the CPA (Video) | Nav.com