Today’s update is going to almost entirely be dedicated to the issues that being discussed in DC regarding the next phase of federal funding. This discussion is likely going to dominate the talk for a few weeks. This is only the beginning of the back and forth of negotiations and each topic may change frequently.
Federal Funding Discussion Items – Where We Stand on Proposals
Overall, Republicans and Democrats are about $2 trillion apart from each other. House Democrats have had their blueprint out for some time now mainly through the passing of the HEROES Act. That came with a price tag of $3 trillion. Senate Republicans have said that their ceiling is $1 trillion. So, let’s take a look at what is going into these trillion-dollar plans.
Payroll Tax Cuts – President Trump heavily favors a payroll tax cut. House Democrats say it is an absolute no. Some Republicans in the House and Senate have issues with agreeing to this as analysts from both parties have labeled the possibility as not well-targeted and narrow in who it helps. President Trump has commented that he may not sign any agreement that does not include these cuts.
CDC / Testing and Tracing Funds – The White House and Republican Senators are also not in sync on funding specific to fight the coronavirus. The President does not want to approve additional spending for COVID testing and tracing by states and opposes more resources for the Centers for Disease Control and Prevention (CDC). Some Republican Senators strongly disagree and argue that states and the CDC need more funding, not less. They are looking at upwards of $25 billion to boost these efforts.
Direct Payment Stimulus – It seems as if this is something that will be agreed to by all parties involved. More and more it looks like the amount will again be $1,200 per individual. Parameters on income level and other qualifiers will need to be worked out and possibly altered from the first round of payments.
Unemployment Payment Increase – The extra $600 provided by the federal government is going to expire at the end of the month and depending on how states pay, as early as the end of this week. House Democrats and Republicans disagree on the extension of this program which affects 25 million individuals. The provision was controversial from the start, mainly because the $600 boost, when added to state benefits, is more than what two-thirds of workers made on the job.
Republicans are looking to dial back the amount by at least $150 and possibly add in a bonus to return to work. Democrats are pushing for the $600 extension to the end of the year and maybe into 2021. Speaker Pelosi has commented that her House will stay beyond their scheduled date to get this item through.
Schools – Division exists on whether to provide new money for testing and what restrictions to place on money for schools as a way to assist with safely opening. They will need to figure out how to use federal funds most effectively with aid to over 125, 000 public and private K-12 schools, as well as nearly 6,000 colleges.
Business Funding – Majority Leader McConnell has indicated that the Republicans plan to provide more help for businesses. In addition to another round of Paycheck Protection Program loans, McConnell said the Republican proposal will reimburse businesses for expenses tied to protective equipment, testing and structural changes that need to be made to protect workers and customers.
Liability Protection – We’ve mentioned this before, but the Republican plan is to provide a five-year shield from lawsuits tied to coronavirus infections unless an entity — including businesses, schools, hospitals, or government agencies — engaged in gross negligence or intentional misconduct.
State and Local Government – The HEROES Act in May provided roughly $1 trillion in additional assistance and the new Republican bill is not expected to include any more money, but instead provide more flexibility.
Main Street Lending Program Update
Colleges, universities, hospitals, and other nonprofits hurting from the pandemic can now borrow funds from the Federal Reserve’s $600 billion Main Street lending program. The Main Street program was originally designed to help small and medium-sized businesses that were healthy before the pandemic to get through the recession. Now, the program will have two new loan options that will provide credit to many nonprofits, including educational institutions, hospitals, and social services organizations.
Under the program, the Fed doesn’t directly make loans to struggling businesses and nonprofits. Rather, it encourages banks to lend by taking the vast majority of the loans off their balance sheets. Not all nonprofits will be eligible to tap the funds, however. The Fed said the program is limited to organizations that were in “sound financial condition” before the pandemic struck.
The Fed said nonprofits seeking loans through the Main Street program must have been operation for at least five years, have at least 10 employees and an endowment of no more than $3 billion. Nonprofits also must borrow at least $250,000 and cannot be too overleveraged. Their ratio of cash, investments and other resources to debt must be greater than 55%. Under the terms of the loans, interest payments are not owed for one year and principal is deferred for two years.
The program is off to a slow start. As of Wednesday, the Fed had purchased just $12 million of loans from the Main Street facility.
Debt Relief for New SBA-backed Loans
The SBA is paying six months of principal, interest, and any associated fees for current and new SBA-backed loans disbursed before September 27 in the agency’s most popular loan programs (7(a), 504, and Microloan).
If you’re seeking a loan to cover fixed assets such as furniture, real estate, machinery, equipment, construction, and/or remodeling, you may need to have information to your lender by August 7 for the loan to be processed in time.
Learn more about starting or growing your small business with an SBA-guaranteed loan and start the process now to take advantage of six months of debt relief by visiting here: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-debt-relief?utm_medium=email&utm_source=govdelivery
Finally, here is a workshop to share with you through the SBA and one of our Chamber members, The Women’s Business Development Center.
Tuesday, July 28
Marketing Strategies and Tactics During COVID-19 | Hosted by the Women’s Business Development Center – Aurora | 12 p.m. Register here: https://www.eventbrite.com/e/marketing-strategies-tactics-during-covid-19-registration-112505079722?utm_medium=email&utm_source=govdelivery
Joliet Region Chamber of Commerce & Industry Staff and Board of Directors
Vice President – Government Affairs
Joliet Region Chamber of Commerce & Industry