What was intended to help millions of Americans and businesses weather the COVID-19 shutdown has left many frustrated, confused and/or left out in the cold. In these ever-shifting sands, here is what we know about the state of the various stimulus programs...at this exact moment.
Unfortunately, what seems to be straightforward rarely is. This holds true for the many regulations being passed by Congress, since the implementation is left up to the DOL, IRS, HHS and who knows how many other departments to provide guidance. Keeping up with the directions has been made even more difficult because the agencies’ FAQs sometimes contradict each other, while still other answers are being modified without any heads up to the public. As of today, here’s where we are on a few of the moving targets.
Stimulus Payments to “All Americans”
This one seems fairly clear-cut, right? $1200 for every adult (who made less than $75,000) and $500 for every child claimed as a dependent. Unfortunately, up to 65 million people won’t receive a stimulus payment. Here are the main categories of ineligible taxpayers:
Some Americans expecting to see stimulus dollars in their bank accounts within the next weeks may be in for a surprise – little or no money deposited. The CARES Act does not explicitly designate these emergency payments as exempt from garnishment. 25 states have already asked the Federal government to close this loophole to ensure that stimulus payments don’t end up in the pockets of debt collectors. Meanwhile, some states are not waiting for a response. In Washington, Governor Inslee issued a proclamation on 4/14/2020 to protect consumer assets, including federal stimulus checks, from consumer debt collectors.
FFCRA Paid Leave
There have been some dizzying reversals in the DOL’s Frequently Asked Questions with regards to Emergency Paid Sick Leave (E-PSL) and Extended FMLA (E-FMLA) leave-request documentation. Plus, the IRS got in on the act and threw another curve ball into the mix. The Families First Coronavirus Response Act (FFCRA) specifically states that an employee can apply for qualifying paid leave with a written request, without backup documentation. However, the DOL decided that they would require backup information anyway. That lasted a few days, until they caved to pressure from Congress. They did keep one expanded provision though; any employee seeking paid leave to care for a child due to school/daycare closure or loss of childcare must attest that there is no other “suitable person” available to care for the child(ren). I am not quite sure how they plan to enforce this.
Add to that, the IRS has purview over reimbursement of qualified paid leave to employers. Their Frequently Asked Questions include an additional employee attestation when seeking paid leave due care for a child due to school/daycare closure or loss of childcare. For any child over age 14, the employee must provide the special circumstances that exist that require the employee to provide care.
Small Business Administration EIDLs
The COVID-19 Economic Injury Disaster Loan (EIDL) program is a “revamp” of current Small Business Administration (SBA) disaster loan relief (which can provide up to $2 million in funding per business). This new version includes an upfront grant of up to $10,000 to be disbursed to all applicants within 3 days of applying.
First issue here, the SBA is no longer taking any applications for EID Loans, since the appropriations funding is close to being exhausted and there is still a hefty backlog of applications. Second, while the grant portion (which does not need to be repaid) was supposed to be provided to all applicants, now the SBA’s website states the funds will be provided to those with a successful application. Third, while the grants were supposed to provide up to $10,000, the SBA recently announced that a cap of $1,000 per employee has been instituted. And finally, the $2 million loans seem to be off the table – the SBA is limiting loans to a maximum of two month’s working capital or $15,000, whichever is less. It is currently unclear if applicants receiving this minimal amount will be eligible for an additional, larger EIDL later.
Paycheck Protection Program Loans
One writer called the PPP Loan program the “Pretty, Pretty Please” program. And with good reason. Unlike the EIDL program where the SBA manages applications and procures backers for the loans, the PPP Loan requires the business to find a willing lender that participates in the program and apply directly through that entity. If a business doesn’t have an existing relationship with a participating lender, they are finding it hard to find a lender willing to work with them. Other banks have simply stopped taking in applications because of the overwhelming backlog of submissions they have already received. Some non-bank lenders (PayPal, Intuit, Square) were just approved to participate in the hopes that more PPPL options will open up for small businesses.
Additionally, there are a few other “gotchas” with this loan program.
The Bottom Line
The speed at which regulations are being passed by Congress and direction is being provided by Federal agencies is dizzying. Typically, it can take months or even years for rules surrounding regulations to be hammered out. Unfortunately, these are not typical times. Most agencies are working on-the-fly, trying to discern Congress’ intent under newly minted regulations – that have been hastily enacted in many cases. I am not quite sure how some directions and fulfillments are so off the mark (such as the 3-day deadline for EIDL grants that is clearly stated in the regulations being summarily ignored). Hopefully things will start to settle down and we will have a play book to follow. At least until the next coronavirus stimulus package is passed.
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I love numbers. I'm a math geek. I read benefits industry articles and periodicals for relaxation (but, honestly, I'm still a fun gal). I also like to share what I've learned and you'll find it all here.