WASHINGTON—After days of contentious negotiations between congressional leaders and the White House, the Senate passed a $2 trillion economic stimulus bill 96–0 late last night to combat the economic fallout of the coronavirus outbreak.
The House is expected to pass the bill on Friday after members have had 24 hours to review it. The President will likely sign it into law soon after.
The package includes $350 billion in federally guaranteed loans for small businesses. The loans will be available to convenience retailers with fewer than 500 employees to help with payroll and other expenses and may be forgiven if the borrower doesn’t reduce staff or significantly lower wages during the term of the loan. The legislation also waives normal fees and personal guarantees common to Small Business Administration loans.
The package also contains $500 billion for loan guarantees for larger companies. Of this, $46 billion is reserved for passenger and cargo air carriers, as well as businesses vital to national security. The remaining balance is available for businesses from all industries to provide needed liquidity in this challenging economic time.
These loans come with a long list of requirements, including a restriction on stock buybacks and dividend payments, as well as worker retention and organized labor protections. While subject to the same requirements, the legislation also directs the Treasury Secretary to create a special loan program within this category specifically for midsize companies, those with between 500 and 10,000 employees. Loans under that program will be capped at an annualized interest rate of 2% and come with the proviso that no interest or capital may be owed within the first six months.
The measure also includes some key tax provisions which may be valuable to convenience retailers. All payroll taxes for 2020 are to be deferred for at least a year. Half of the amounts owed in 2020 will be due on December 31, 2021, with the remainder due on December 31, 2022. Businesses also may carry back net operating losses dating back to 2018 for up to five years. The legislation also makes a technical correction to the 2017 tax law which impacted Qualified Improvement Property depreciation. That fix is retroactive to the passage of the tax law, meaning affected businesses may file amended 2018 filings to recoup some lost funds.
Federal unemployment benefits for individuals unable to work due to the impacts of COVID-19 are significantly expanded. The provision provides up to 39 weeks total of unemployment benefits, inclusive of regularly available weeks from states, at a rate set at $600 above what the applicable state would provide. This was a key sticking point in negotiations as Democrats sought to ensure that unemployment insurance payments would replace 100% of income for most Americans. It also was subject to an amendment filed by Republican Senator Ben Sasse, who sought to cap such amounts at 100% of an individual’s previous wages in an attempt to ensure that employment remained more lucrative than unemployment assistance. That amendment failed in a largely party line vote.
Americans also can expect direct payments from the federal government. The legislation includes one-time payments of $1,200 per adult and $500 per child to every American. The total amounts will be reduced by 5% of the amount of adjusted gross income made over $75,000 for individuals, $112,500 for heads of household and $150,000 for joint filers.
This is the third stimulus bill Congress has proposed to address the economic and social disruptions of the pandemic. It follows an initial $8.3 billion measure largely aimed at developing a vaccine for COVID-19 and a second package, which passed last week, that mandated greater access to sick leave for workers, plus free COVID-19 testing.
“If we get this package, we’ll be setting the stage for a good rebound in the second half of the year,” said Larry Kudlow, the top White House economic advisor. “That’s our thinking. This package will undergird workers and families, Main Street, small businesses.”
NACS has compiled resources to help the convenience retail community navigate the COVID-19 crisis. For news updates and guidance, visit our coronavirus resources page.