New Stimulus Bill: What You Need to Know About a Second Stimulus Check, $ 200 Unemployment Benefits, PPP, and More


By Richard Harroch

On July 27, 2020, Republicans introduced their new approximately $ 1 billion stimulus package proposal called the HEALS Act (Health, Financial Assistance, Protection, Liability and Schools Act). Democrats had previously proposed a $ 3 trillion + stimulus package under the “Heroes Act,” but Republicans had rejected it as being too broad and too large.

There has been so much news and statement about a new stimulus package that it is difficult to discern what will become law. This article describes what you need to know about the possible provisions of the upcoming stimulus bill by answering the most important questions.

1. Will there be a second stimulus payment?

Yes, there will almost certainly be a second stimulus payment, although the specifics are changing. The most likely result is a second stimulus payment similar to the first payment.

2. How much will the second stimulus payment be?

The second stimulus payment, as proposed by Republicans on July 27, will likely be:

  • A one-time stimulus payment of $ 1,200 for each individual
  • A one-time stimulus payment of $ 2,400 for married or joint taxpayers
  • A one-time $ 500 stimulus payment for dependents, with no age restrictions (CARES requires that dependents be under the age of 17)

3. What are the income requirements to be eligible for a second stimulus payment?

To qualify for the second stimulus payment, you likely must have earned (probably in 2019) less than $ 75,000 (for individuals) or $ 150,000 (for married / joint taxpayers).

The original stimulus payment provided that if your income were above those limits, then the stimulus payment would be reduced by 5% of your adjusted gross income above those limits. The second stimulus payment is expected to have a similar provision.

Republicans initially proposed a $ 40,000 threshold instead of a $ 75,000 threshold, but that proposal appears abandoned. Democrats proposed a larger stimulus payment ($ 2,000 a month) but it probably won’t be included in the final package.

4. Will the federal supplemental benefit of $ 600 per week be extended for laid off employees?

The original CARES Act provided for a supplemental federal unemployment benefit payment of $ 600 to terminated employees. These supplemental benefits expired on July 25 or July 26, depending on the state.

Democrats want to extend those benefits. Republicans complained that the $ 600 is too high because it exceeds many workers’ wages, discouraging them from returning to work.

The proposed Republican package on July 27 instead offered a temporary supplement of $ 200 per week to state unemployment payments. That $ 200 would be replaced by a more complicated program that would pay workers 70% of the income they collected before losing their job. Under the Republican proposal, states would incorporate the 70% formula in two months. Given how arduous it has been for states to handle the massive volume of unemployment claims, it is difficult to see how such an approach is feasible within a reasonable period of time.

This is probably the most disputed problem; however, a compromise is expected to be reached in the coming weeks.

On July 27, certain California lawmakers indicated they would move to pass legislation to fill any gap in unemployment benefits of $ 600 if Congress passes a lesser amount, to help Californians during the economic downturn. Legislative leaders expressed the view that such an added benefit would be crucial to avoid an economic collapse and ensure that working families can keep their homes and pay for necessities.

5. Will independent contractors, freelancers, and concert workers continue to receive the additional $ 600 per week in benefits?

The Pandemic Unemployment Assistance (PUA) program contained in the original CARES Act provided additional $ 600 federal aid per week for independent contractors, freelancers, and workers who were adversely affected by Covid-19 and who otherwise they are not eligible for standard unemployment insurance benefits. Under the CARES Act, this aid is scheduled to continue until December 31, 2020. But there is some uncertainty about how independent contractors, freelancers and contract workers will be treated, so we may have to wait for that the final stimulus bill alleviates uncertainty.

Related article: Financial aid for freelancers and independent contractors affected by the coronavirus crisis

6. Will the Payroll Protection Program (PPP) be expanded or expanded?

The PPP loan program is due on August 8, 2020 for any new loan. The PPP has been a great help to small businesses by making forgivable favorable loans.

Republicans in their new stimulus package proposed an expansion of the PPP, including a simplified forgiveness process and a provision that would allow smaller companies to obtain second PPP loans.

7. Will the new stimulus package include a cut in payroll taxes?

No. President Trump previously insisted on a payroll tax cut as part of any new stimulus law. But Treasury Secretary Mnuchin recently proclaimed that a reduction of the payroll tax or postponement of the payroll tax would not be included initially, but could be added at a later date.

8. Will there be new provisions for student loan forgiveness in the next stimulus package?

While Democrats included student loan forgiveness provisions as part of their Hero Act proposal, Republicans did not, and it is unlikely that additional student loan forgiveness / deferment provisions will be included in a final stimulus package.

9. Will there be a “return to work” bonus for employees?

Senator Rob Portman (R-OH) had proposed a “return to work” bonus, which would provide a financial incentive for people to return to work. The proposed bonus was $ 450 per week over a period of time if he returned to work on a designated date.

At the moment, it is unclear whether the final stimulus package will include such a bonus.

10. Will there be help for states and cities in the new stimulus package?

Both Republicans and Democrats acknowledge that states and cities have been significantly affected by the Covid-19 pandemic.

Democrats have proposed approximately $ 1 billion for state and local aid. The Republican proposal of July 27 did not offer additional funds to the state and local government, but it does give them more flexibility in the use of existing federal assistance.

Some compromise will be reached on this issue, and therefore there is likely to be a significant amount available to assist states and cities.

11. Will there be liability protection for litigation arising from the pandemic?

The republican package of July 27 proposes the protection of civil liability against lawsuits derived from the pandemic for companies, hospitals and schools, for five years.

The protection would raise the burden of proof for plaintiffs that they would have to demonstrate that a defendant was “grossly negligent or engaged in willful misconduct,” and also that they violated state and local public health guidelines at the time. .

Democrats have voiced their opposition to this concept, so expect negotiations on this issue.

12. Will tenants living in federally backed mortgage homes still be protected from evictions for not paying rent?

The CARES Act stipulated a moratorium on evictions for tenants living in homes with federally-backed mortgages, but which expired on July 25, 2020. However, homeowners must still notify 30 days in advance before starting the eviction procedures. With many courts closed due to the pandemic, eviction proceedings will likely take more than 30 days.

The new Republican stimulus package on July 27 proposed extending the moratorium, but the extension date is not yet clear.

The Republican Stimulus Package does not provide assistance to tenants of buildings backed by private mortgages.

13. Will there be funds allocated for the Covid-19 test?

The Republican July 27 proposal provides $ 16 billion in new funding for coronavirus testing, as well as clarifies that $ 9 billion in funds previously approved under the CARES Act will be used for testing.

14. Will there be funds allocated for schools?

The July 27 Republican proposal allocates $ 100 billion to schools, with $ 70 billion going to kindergarten through 12th grade schools and $ 30 billion to colleges and universities. An additional $ 5 billion has been proposed to go to the Governor’s funds to be allocated to education as the governors deem appropriate.

Democrats had previously proposed $ 430 billion for schools.

15. When will a new stimulus law be enacted and take effect?

The timing of a new stimulus law depends on negotiations between Democrats and Republicans resulting in a final law, which is then signed by the president. The best estimate is in early August.

The Senate is scheduled to go into recess on August 7. If a new stimulus bill cannot be passed by then or if there is no delay in the recess, neither the House nor the Senate are scheduled to return until after Labor Day (September 7).

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Copyright © by Richard D. Harroch. All rights reserved.

About the Author

Richard D. Harroch is Managing Director and Global Head of M&A at VantagePoint Capital Partners, a venture capital fund in the San Francisco area. He focuses on the Internet, digital media, and software companies, and was the founder of several Internet companies. His articles have appeared online on Forbes, Fortune, MSN, Yahoo, FoxBusiness, and AllBusiness.com. Richard is the author of several books on startups and entrepreneurship, as well as a co-author of Poker for Dummies and a Wall Street Journal best-selling book on small business. He is the co-author of a 1,500-page book by Bloomberg: Mergers and Acquisitions of Private Companies: Analysis, Forms and Agreements. He was also a corporate and mergers and acquisitions partner at the Orrick law firm, with experience in startups, mergers and acquisitions, and venture capital. He has participated in more than 200 merger and acquisition transactions and 500 startups. He can be reached through LinkedIn.

This article was originally published in AllBusiness.com. See all articles of Richard Harroch.

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