What You Need to Know About Getting Financial Stimulus Money

By Mark Roberti

Both manufacturers and systems integrators in the United States are eligible for Small Business Administration loans for two months of payroll, and repayment will be forgiven if the rules are followed.

The $2 trillion Phase III Stimulus package passed by the United States Congress last week couldn't come soon enough for many small businesses, including both manufacturers and systems integrators, that are affected by the coronavirus economic shutdown. My colleagues have scoured multiple news sources to put together the information from the law that applies to electronics manufacturers and integration companies. Of course, you should consult your own financial advisors and tax consultants on the law, but I felt this information was valuable and wanted to share it with you.

What's In the Stimulus Package for Small Businesses?
The bipartisan legislation signed into law by President Trump today sets aside hundreds of billions of dollars in available funds specifically for small businesses to obtain loans from the federal government. The program has $350 billion in loans that will be specifically administered by the Small Business Administration (SBA). This $350 billion "Paycheck Protection Program" is separate from the $50 billion in SBA loans that was put into law several weeks ago as part of the Phase II Stimulus package. Moreover, there is another $454 billion that will be administered by the new lending agency managed by Treasury Secretary Stephen Mnuchin. Other major industries, including the airlines and companies linked to national security, will have separate funds available.

Who Qualifies and How Do You Get a Loan?
Any small business with fewer than 500 employees is eligible for a loan. To obtain a loan, qualifying small businesses are asked to simply go to their local FDIC-insured bank. Indeed, while speaking to reporters, Mnuchin said small businesses in many cases will be able to walk out of a bank with the money in hand in one day. In an effort to eliminate red tape, there is no hefty government website application. The loans are not like SBA loans in the past that were linked to natural disasters. Businesses facing the prospect of bankruptcy from the coronavirus outbreak will have a separate program in which they can participate.

How Much of a Loan Can You Get?
Small businesses can obtain a loan that covers two months of payroll, not exceeding $10 million. Payroll for employees who earn more than $100,000 per year is not covered. Portions of the loans can also be used for debt obligations, mortgage or rent payments, utility payments, and payroll support. The loans themselves must be secured for a term of no longer than five years. Businesses will be eligible for the loans through Dec. 31, 2020.

Is the Loan Forgiven?
While the loan is in place, employers must maintain the same employment level within their company that they had on Mar. 13, 2020. In addition, there are limits on the amount of compensation that can go to a company's owner until Mar. 1, 2022. But the law takes it one step further by declaring that small businesses which either maintain their employees during this crisis or rehire those workers will have their loans fully forgiven by the federal government.

What Can Individuals Get?
The stimulus package also includes relief for individuals, including expanded unemployment benefits for workers and direct payments by the government. Specifically, individuals earning less than $75,000 (adjusted gross income) will receive a one-time check for $1,200. Families with children will receive $500 per child. Married couples earning less than $150,000 jointly with no children will receive $2,400. The payouts scale with diminishing amounts up to $99,000 for individuals and $198,000 for married couples. Payouts are expected to be out within three weeks, according to Mnuchin.

Individuals who are on unemployment insurance will get a $600 boost in their unemployment disbursement per week. Also, self-employed people and independent contractors are now newly eligible for these unemployment benefits. People who are diagnosed with the virus and unable to work, or who are self-quarantining due to possible exposure, are also eligible.

Canadian Benefits
Canada has proposed a program for its citizens during this turbulent time as well. It includes a doubling of the payroll exemption for businesses from $490,000 up to $1 million in payroll; a suspension of any penalties related to non-payment of sales taxes for alcohol, tobacco, fuel and other items until Aug. 31; a special tax credit for business investment; and suspension of property tax reassessments

Mark Roberti is the founder and editor of RFID Journal.