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One of the key and most important responses of people towards the Covid-19 pandemic is social isolating to slow down the virus spread. While severe travel restrictions and business closures are the measures being done to combat the pandemic, these also have been found to put a drastic effect on the economy. To give support to the sinking economy, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) has recently been passed in the U.S. With $3 Trillion in the bucket, this act has become the biggest ever economic stimulus bill in the U.S. history. The article highlights the autonomy of the $2 Trillion Stimulus package and how can it benefit the businesses.
The “Goods” of Stimulus Package
Loans for Small Businesses
Small businesses and sole proprietors are eligible to borrow up to 2.5 times their average monthly payroll costs between Feb 15, 2019, and Jun 30, 2019. Loan amounts depend on the way your bank calculates the eligible payroll costs. All businesses operating for even less than one year are also eligible; however, they must annualize it based on the months they have been operating.
The remarkable thing is that the loan is 100% guaranteed by the government; hence, there is no need for personal tax returns or personal collateral for loan application.
In short, if you have been into the business since Feb 15th, with less than 500 employees, and your business has been impacted by the COVID-19, you can apply for a small business loan.
Unforgiven Portion of the Loan
If a business is eligible to have either a portion of or a full loan forgiven, the forgiven amount is not taxable. Using these funds is like a tax-free sale for businesses to run their operations during a crisis.
Benefits for Big Businesses
This part of the Stimulus package aims to stabilize large scale businesses during the crisis. The most affected industry to require support would be the airlines. The Stimulus Bill has allocated around $58 billion for cargo and commercial airlines and airline contractors. Maybe, as a response to the current criticism of this industry, businesses getting stimulus funds will be stopped from stock buybacks for the tenure of the loan plus a year. To maintain the national security, around $17 billion have been allocated, whereas the primary recipient is being perceived to be Boeing.
The Next Step for the Businesses
If you are eligible for any of the business benefits of the $2 Trillion Stimulus Package, you mustapply right away to avail it. Make sure the IRS has your current address, you have filed your2018 tax return, and your banking information is updated. The distribution of the stimuluschecks is likely to be started over the next few weeks. So, be prepared!