With a global pandemic currently at hand, our government had to account for the economy, as businesses all over the nation have been heavily impacted by COVID-19. With most small businesses struggling to make ends meet due to mandated social distancing in certain states and bans on gatherings of more than 10 people in others, a $2 trillion stimulus package, called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), was passed in order to provide support to the small businesses that need it. Keep reading to find out how this bill will impact your small business.
To avoid laying off employees of small businesses, a $350 billion forgivable loan program is going to be put into place. This small business loan program will distribute $350 billion to small businesses with 500 or less employees that are continuing to pay their employees. These loans will be distributed via banks and lenders, however, the amount that will be loaned depends on how much the small business paid its employees this year (approximately from January 1st until February 29th). The maximum loan amount is $10 million. For those with SBA loans already, interest and principal will be waived for six months.
Due to the coronavirus pandemic, “a record 3.3 million people filed for first-time jobless benefits,” (Luhby, 2020). For those that are unemployed as of late, this bill extends out an unemployment insurance program. Under the stimulus package, those that are jobless will be given an extra $600 per week, in addition to their state benefits, for four months (Luhby, 2020). Not only will the stimulus bill provide benefits to those who are unemployed, partially unemployed, or unable to work due to coronavirus, but the bill would also aid those who received cuts in their hours due to the virus. In doing so, the bill would encourage states to provide work-sharing programs. These programs would allow employers to cut hours without laying off their employees completely.
The stimulus package will suspend RMD (required minimum distribution) payments for 2020 for the following plans: 401(k), 403(b), 457(b), and IRAs. For taxpayers, this means that their payments will be pushed back as 2020 RMDs require those who are age 72 are required to take funds from their retirement plans. This bill allows individuals to keep those funds in their retirement plans. Prior to the waiver, these taxpayers’ RMD calculations would be based on their retirement fund balance as of December 31st, 2019, when the Dow was at 28,000. Today, the stock market has declined and would need to take out an even higher amount than anticipated.
For those with questions related to the most recent bill and how it will affect their small business, do not hesitate to contact us. We are here to guide you through the details of the stimulus package and help plan your business’ financial future. Give us a call at (321) 225-3154 or email us at firstname.lastname@example.org
Luhby, Tami. “Stimulus Bill Offers $600 a Week to the Unemployed for 4 Months.” CNN, Cable
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Mercado, Darla. “Coronavirus Relief Bill Would Relax Rules on Retirement Savings.” CNBC,
CNBC, 25 Mar. 2020, www.cnbc.com/2020/03/25/what-the-senate-coronavirus-relief-bill-means-for-your-retirement.html.