There is no doubt businesses are already feeling economic pain from the devastating COVID-19 outbreak. Now that the Families First Coronavirus Response Act has been signed into law by President Donald Trump, additional support should begin flowing to workers, families and small business owners impacted by the virus. The law requires that “insurers, Medicare, Medicaid, and other federal health programs fully cover testing and related services for COVID-19 without cost-sharing.”
Yesterday, the National Association of Realtors sent an email to members about the new law, explaining what its impact on the industry might be. “Last week, we urged Congressional leaders to include robust protections for small business owners and the self-employed in this bill. This bill does both, and with the structure of the tax credits, financial relief will come quickly,” Shannon McGahn, NAR senior vice president of government affairs, stated.
There’s help for both employers and the self-employed in the emergency provisions. NAR outlined key provisions in the Coronavirus Response Act, such as section 7001 which states an “employer shall receive a refundable tax credit equal to 100% of qualified paid sick leave wages paid for each calendar quarter,” and section 7002, which states “eligible self-employed individuals are able to claim a refundable tax credit equal to 100% of the qualified sick leave equivalent amount for those who must self-isolate, obtain a diagnosis or comply with a self-isolation recommendation with respect to COVID-19.”
As job numbers rolled in, it became clear that unemployment will be a widespread problem. The Department of Labor did note this week that “the increase in initial claims are clearly attributable to impacts from the COVID-19 virus.” For the week ending March 14, the number of initial claims increased by 70,000 from the previous week, marking the highest level since September 2017.
But independent contractors are hurting too. Section 7002 goes into further detail on how self-employed businesspeople can get a tax credit for sick leave. For example, “eligible self-employed individuals caring for a family member or for a child whose school or place of care has been closed due to COVID-19 receive a credit equal to 67% of a qualified sick leave equivalent amount.”
Further, “for those self-employed individuals who must self-isolate, obtain a diagnosis or comply with a self-isolation recommendation, the qualified sick leave equivalent amount is capped at the lesser of $511 per day or the average daily self-employment income for the tax year.”
In addition to the new law, the government is also providing mortgage relief to homeowners. National Association of Home Builders Chairman Dean Mon recently released a statement noting that HUD will “suspend foreclosures and evictions for mortgages insured by the Federal Housing Administration through the end of April.” Fannie Mae and Freddie Mac will also suspend all foreclosures and evictions for at least 60 days.
Still, NAHB noted there’s pain ahead for the homebuilding industry. “Builders in the near-term should be prepared for approval and other business delays, check on their subs and workforce, and watch their cash reserves,” Mon said.
In an effort to help small businesses affected by COVID-19, the Small Business Administration has updated its criteria for states seeking an economic injury declaration related to the pandemic. The revised criteria issued by SBA allow for a faster qualification process for states seeking SBA disaster assistance and an expanded statewide access to SBA disaster assistance loans.
These measures will now require states to certify that at least five small businesses within a particular county have “suffered substantial economic injury.” Once an economic injury has been declared, disaster assistance loans will be available statewide and in counties contiguous to that state.
Once a state has issued an economic injury declaration, any loans provided through economic injury disaster loan assistance “may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact.” Nonprofits will pay a 2.75% interest rate and small businesses will pay a bit higher rate, at 3.75%. The SBA is continuing to add eligible areas to a list on their site.