URGENT BIZ TEAM ALERT - "Phase 3" Stimulus Bill Passes; On Way to POTUS

Category:

COVID · Public Policy · Financial Services · Healthcare · Economic Development

The Greater Kansas City Chamber of Commerce (KC Chamber) applauds Congress for its bipartisan and bicameral work to pass the “Phase 3” relief bill known as the CARES Act (Coronavirus Aid, Relief and Economic Security Act) that is estimated to be upwards of $2 Trillion (and larger because of the flexibility given to the Federal Reserve to inject more money into the economy which will put it well over three times the amount of the 2008 TARP bailout). According to Treasury Secretary Steve Mnuchin, this bill is designed to add relief to the economy for 10-12 weeks. Below is a summary of the major parts of the “Phase 3” stimulus bill (All numbers approximate):

  • Individual Stimulus Checks ($301B): Directs on-time payments to Americans of $1,200 ($500 to most children) in early April. These payments will scale down for individuals who make more than $75,000 and above, eventually phasing out for those individuals who make $99,000 or more.
  • Assistance to Companies ($500B): Provides up to $500B for loans to companies, cities and states during the pandemic with oversight that includes a new Inspector General in the Treasury Department, similar to the oversight mechanism for TARP. This includes $62B in loan guarantees, grants, and other assistances for passenger and cargo air service and support contractors. The bill also includes $17B for firms deemed important to national security. The federal government will be allowed to take equity stakes in these companies and prohibits stock buybacks for companies that take this assistance in an unexpected alliance between the Trump Administration and Democrats. Sec. Mnuchin has already said the federal government will take equity stakes in the airlines in exchange for cash grants.
  • State and Local Assistance ($150B): $142B is set aside for the states and $8B is set aside for local governments. Notably, any money sought by an individual municipality would reduce the amount available to the rest of the state.
  • Assistance to midsize businesses: Allows the Treasury to provide financial assistance to companies larger than 500 but smaller than 10,000 employees pursuant to the requirement that the company will use the funds to retain or restore at least 90% of its workforce with full compensation and benefits.
  • Assistance to Small Businesses and 501(c)3’s ($377B): Provides assistance of $377B loan guarantees for small businesses, non-profits and self-employed workers with loan forgiveness incentives for employers who retain or restore employees and sustain wages of employees. These loans will be issued through the 7(a) program, the agency’s flagship loan offering in partnership with private financial firms, which make the loans, and the SBA which guarantees them. This package includes entrepreneurial assistance, expansion of SBA Express loan and expansion of the Economic Injury Disaster Loans program including availability to all nonprofits, and cash advances of $10,000 are forgiven if it is spent on business-related expenses.  
  • Unemployment Insurance ($250B): Pumps more money into state unemployment insurance programs, expands eligibility and gives workers $600 a week for four months on top of what the state programs pay. The legislation includes freelancers, gig workers and other self-employed workers. The legislation also extends paid unemployment insurance assistance from the usual 26 weeks in most states to 39 weeks.
  • Hospitals and Health Care Infrastructure ($127B): Directs hospitals to receive $127B to address needs during the crisis. This also includes free coronavirus testing.  Additionally, the package would ensure states can get a 6.2% increase in matching federal funds for Medicaid and delay scheduled reductions to hospitals that care for a large share of uninsured or low-income patients. Payments to hospitals for treating patients infected with the virus would also be increased by 20%.  
  • Federally Qualified Healthcare Centers (FQHC’s): FQHCs would be able to serve as distant sites to provide telehealth services to patients in their homes and other eligible locations. The legislation would reimburse FQHCs at a rate that is similar to payment for comparable telehealth services under the physician fee schedule. The bill also relaxes telehealth regulations related to FQHC’s.  
  • Other Public Health Needs: This includes support for VA Hospitals ($20B) and an investment of $200M in telemedicine and $5.3B for CDC and NIH, among many other provisions. More information on healthcare and health systems can be found here.  
  • Slew of Tax Policy Changes Including ($220B):
    • Businesses would have temporary flexibility to use losses to offset taxes
    • Businesses can defer the 6.2% tax they pay on wages to fund Social Security
      • Must pay half of those taxes by end of 2021 and second half of 2022
      • This includes self-employed individuals
    • Ability for businesses to write off more of the interest paid on debt during the crisis
    • Restaurants and retailers would be able to deduct the entire cost of renovating their stores in a single year (rectifying a mistake in the 2017 tax law)
    • Retention tax credit for employers to encourage businesses to keep workers on payroll during the crisis; employers would get a refund for half of what they spend on wages up to $5,000 per worker
    • By order of Secretary Mnuchin: Tax filing deadline has been pushed back to July 15…can still file a six-month extension  
  • Banks: The bill delays implementation of a new rule that will require banks to put away reserves for any estimated loan losses at once rather than spreading them out over the life of the loan in addition to a variety of other provisions to provide flexibility.  
  • Education ($30.75B): K-12 education will receive $13.5B for states and each governor will receive $3B to use at their discretion. Additionally, over $14.5B will be available for the higher education emergency relief. The bill also includes a provision to suspend payments through September on federal student loans, with no penalties.  
  • Child Care Development Block Grant ($3.5B): Assistance for childcare and childcare providers during the crisis.  
  • Food Assistance and SNAP ($25B): Stimulus includes $16B increase for the SNAP Program and nearly $9B in additional aid for child nutrition.  
  • Aid to Farmers and assistance to other crop producers ($24B)  
  • Aid for transit:
    • Commercial/Private Airports: $10B
    • Passenger railroads and public transit agencies would receive direct infusion of federal aid
      • Amtrak--$1B
      • Transit systems would receive $25B in grants; $4B earmarked for rural areas only  

Both sides have indicated at least one more round of stimulus could follow with Senator Roy Blunt and Speaker Nancy Pelosi indicating Congress will begin thinking about a “Round 4” and House Majority Leader Steny Hoyer telling Democrats there could be two more rounds of fiscal stimulus. The KC Chamber continues daily communication with local, state and federal officials to identify opportunities to bring this relief to KC area businesses, workforce and citizens and to communicate the need to be proactive in developing strategies to ‘restart’ the economy following this cessation of business.