The Senate's $2 trillion emergency aid bill is nearing the
finish line in Congress, as lawmakers moved to cushion the economic
impact of the coronavirus outbreak. Here is a look at the major
pieces of the package, and how households and businesses are set to
benefit, based on where the legislation stood late Wednesday.
We've broken it into four parts: the top lines, households and
workers, business and banking, and personal finance and taxes.
THE TOP LINES
-- $250 billion to make unemployment insurance available to more
categories of workers and to extend the duration of benefits to 39
weeks from the 26 weeks typical in most states. It would also
provide an extra $600 a week for four months.
-- $301 billion in direct payments to households.
-- $349 billion in loans to small businesses, with the amount
spent on payroll, rent or utilities converting into grants that
don't have to be repaid.
-- $500 billion for loans, loan guarantees or other aid to
businesses, states and municipalities -- including the possibility
that the government will take direct equity stakes in distressed
companies. Of the total, $29 billion is set aside for cargo and
passenger airlines, and $17 billion is for businesses deemed
critical to national security, such as Boeing. The remaining $454
billion would go to backstop losses in lending facilities
established or expanded by the Federal Reserve.
-- $32 billion in grants to cover wages at passenger air
carriers, cargo air carriers and contractors.
-- $150 billion in direct aid to states, distributed according
to population size. A municipality could apply to receive aid
directly, reducing the amount available to the rest of the
-- $221 billion in a variety of tax benefits for businesses,
including allowing businesses to defer payroll taxes, which finance
Medicare and Social Security, for the rest of the year. It would
also temporarily allow businesses to claim deductions using today's
losses against past profits to claim quick refunds for cash
-- $340 billion in supplemental spending, which includes $117
billion for hospitals and veterans' care. It also includes $25
billion mostly for public transit to make up for revenue lost
because of dwindling ridership.
HOUSEHOLDS AND WORKERS
Checks to individuals
The bill provides for direct payments of $1,200 to adults and
$500 per child to American households, structured as tax refunds to
allow the IRS to distribute the funds quickly. There is no
provision for future direct payments in the event the economic
disruption lasts into the later spring. The direct grants are
phased out for upper income brackets, starting with $75,000 of
individual income. The grants aren't available at all, for example,
for individuals without children making more than $99,000 and
married couples without children making more than $198,000.
The deal would extend the duration of jobless benefits to 39
weeks from 26 available in most states, and includes a $600-a-week
increase for the first four months, with the bonus payment
available through July 31. These benefits would be extended to
contract workers, freelancers and other nontraditional workers, who
lack benefits in some states. The aim is to replace lost wages as
completely as possible.
Gig Workers and Freelancers
The bill expands some benefits and grants to independent
contractors, such as Uber drivers and freelance film editors, that
normally go only to employees or small businesses. For example, it
extends unemployment benefits to self-employed workers, including
independent contractors, freelancers and other nontraditional
workers who are unemployed, partially unemployed or unable to work
because of Covid-19. It includes a $600-a-week increase on top of
current levels of unemployment benefits for four months.
Independent contractors also can apply for the $10 billion set
aside for emergency EIDL -- economic injury disaster loan -- funds,
which are normally available only to a narrower category of small
BUSINESS AND BANKING
For passenger airlines, the bill includes $25 billion in direct
funding for worker salaries and benefits, as well as up to $25
billion in loans and loan guarantees. The bill hews to what
airlines had been asking for. Carriers had lobbied aggressively for
direct grants rather than just loans, warning that without an
immediate infusion of cash, they would have to make sharp job cuts.
"This is not a corporate bailout; it's a rescue package for
workers," Sara Nelson, president of the Association of Flight
The bill also includes $3 billion in assistance to keep paying
contract workers that provide airline catering, baggage loading,
ticketing and check-in, and other services at airports. Cargo
airlines will be eligible to receive $4 billion in loans and
guarantees, and $4 billion in payroll assistance.
In exchange for the payroll grants, carriers must agree not to
furlough, lay off or cut pay for employees until Sept. 30.
Assistance also hinges on companies agreeing not to buy back shares
or pay dividends, and to limits on executive compensation.
The package also allows the Transportation Department to direct
airlines to maintain specific flights based on their schedules on
March 1, before carriers had instituted the deepest cuts to their
flying. This would include services to rural communities and to
support delivery of health-care-related cargo.
The closure of nearly all of the country's assembly plants has
forced thousands of manufacturers throughout the industry's supply
chain into a sudden cash crunch. The bill's authorization of up to
hundreds of billions of dollars in loans should help. "If not for
that, I would foresee quite a bit of bankruptcies," said Jeremy
Rice, automotive practice lead at accounting firm Mazars U.S.A. One
omission: Industry lobbyists have asked to push back implementation
of the new North American trade deal, which will require
adjustments to manufacturing footprints for some cars to still
qualify for duty-free status. As of now, that deal is still set to
enter into force on June 1.
The bill delays implementation of a new accounting rule that
would have required banks to sock away reserves for any estimated
loan losses all at once, instead of spreading them out over the
life of the loan. FDIC Chairman Jelena McWilliams and others had
expressed concern that the rule would tie up funds banks could
otherwise lend to struggling consumers and businesses.
The bill gives the Office of the Comptroller of the Currency the
authority to allow banks to make loans that would typically trip up
size restrictions. Smaller community banks with less than $10
billion in assets get more lending flexibility through a higher
maximum leverage ratio and more wiggle room if they exceed it.
Banks will also get more leeway on how they account for troubled
consumer loans, allowing them to work with struggling borrowers who
have fallen behind on their payments.
Boeing Co. stands to have access to $17 billion in loans and
loan guarantees for "businesses critical to maintaining national
security," according to congressional officials and a senior
aviation industry executive closely tracking the legislation. The
Chicago aerospace giant had sought at least $60 billion to be
shared with suppliers and the broader aerospace manufacturing
sector. It wasn't immediately known how much of the overall
stimulus funds could benefit Boeing's commercial arm and its
Part of the $17 billion can be directed at defense contractors
and their suppliers, many of whom also work on commercial programs,
industry executives said. A Boeing spokesman declined to comment
midday Wednesday, while the legislative process remained under
Taxpayer-funded loans would come with various conditions,
including restrictions on stock buybacks and dividends and layoff
prohibitions for six months. The assistance could also allow the
U.S. treasury secretary to take an equity stake in government loan
recipients or charge interest on loans.
--Andrew Tangel and Doug Cameron
The bill contains no major provisions to specifically aid the
U.S. energy industry. Beleaguered U.S. oil producers had sought a
range of remedies, including preferential tax treatment, direct
subsidies and a $3 billion purchase of oil by the federal
government for the Strategic Petroleum Reserve. The renewable
energy industry had sought extensions to tax provisions that would
have helped wind-and-solar developers secure valuable tax credits
even if there were construction delays. Industry officials
expressed disappointment. Democrats were unwilling to support what
they considered to be bailouts, and Republicans balked at
supporting renewables, say energy industry analysts.
--Christopher M. Matthews
The bill directs more than $48 billion to agriculture and
nutrition programs, helping cushion the blow for producers reeling
from the latest in a string of hits to the U.S. farm economy, as
prices sank for corn, soybeans, wheat and cattle. "Our markets have
been very depressed such that it's questionable whether a person
can make a living at these levels," said Illinois grain farmer Paul
The law designates $14 billion to replenish the Commodity Credit
Corp., a Depression-era program designed to stabilize farm incomes,
and $9.5 billion to support producers of specialty crops, livestock
and dairy, as well as those who supply farmers markets, restaurants
Kate Leone of Feeding America, a nationwide network of 200 food
banks, said the group was grateful for the bill's support of food
banks, but disappointed that participants in the nation's food
stamp program wouldn't see increases in their benefits.
--Jesse Newman and Kirk Maltais
The stimulus package adds $27 billion to an emergency fund that
could give a boost to dozens of projects by pharmaceutical
companies and academic groups developing drugs and vaccines against
coronavirus. The emergency fund received a smaller amount of
funding under a coronavirus response act signed earlier in March.
There is no Covid-19 vaccine, but dozens are in development.
The package allows the government to take steps to ensure that
products developed with the emergency funding will be "affordable
in the commercial market," but that these steps shouldn't delay
development of the products.
The bill also includes provisions to increase reporting of
potential shortages from drug manufacturers and companies that make
active pharmaceutical ingredients, which are the building blocks of
prescription drugs. Many of these raw materials are produced
overseas and drawn more attention during the virus outbreak.
Companies that make respirators and other medical devices would be
required to report to the federal government potential supply chain
--Peter Loftus and Jared S. Hopkins
The hotel industry last week asked the White House for a $150
billion financial-aid package, targeted specifically for
hospitality companies. What it got instead from the stimulus bill
is a patchwork of loans, grants and tax help, much of it through
the $350 billion in loans and grants for small businesses. The
majority of U.S. hoteliers qualify as businesses with fewer than
500 employees, making less than $35 million in annual revenue.
The lodging industry even scored a victory in getting language
in the Senate bill that defined each individual hotel as its own
business. Hotel owners with several properties had been concerned
that they would not qualify as a small business because taken
together, all their properties would have pushed them over the
current Small Business Administration's definition.
The federal boost in unemployment insurance will help the many
hotel employees who have been furloughed across the U.S. Larger
hotel companies can apply for loans through the Treasury
Department's economic stabilization fund. But few in the lodging
industry expect travel to bounce back by late spring, or even soon
For larger movie theaters, many of which are expected to stay
closed as long as government guidance limits the number of people
who can gather in one place, the stimulus bill's loan guarantee
fund could help major chains pay leases or mortgages that are still
due for the closed operations, or pay suppliers with bills for
everything from popcorn to custodial supplies, said Patrick
Corcoran, spokesman for the National Association of Theatre Owners
Small and midsize chains are more likely to take advantage of
the bill's provisions for small businesses, especially those
looking to compensate workers not collecting a paycheck with the
theater closed. A majority of the sector's 150,000 workers in the
U.S. are hourly wage employees, Mr. Corcoran said.
The music industry stands to benefit from the bill's provisions
that expand unemployment and small-business loans to independent
contractors and sole proprietors. Now, session musicians,
songwriters and gig workers at venues and on tours that were
postponed or canceled will be eligible to apply for such benefits.
Charitable organizations affiliated with the music business could
also receive grants from the new funding for the National Endowment
of the Arts.
"This is a huge lifeline for musicians right now," said Mitch
Glazier, chief executive of the Recording Industry Association of
America, a trade organization that lobbied on behalf of some 40
music industry companies. "For an independent contractor to get
full unemployment benefits during a time of no work is the
difference between them being able to stay a musician or not."
The financially strained U.S. Postal Service is getting a $10
billion Treasury loan to help the mail carrier during the pandemic.
That should be welcome news for Amazon.com Inc., United Parcel
Service Inc. and, to a lesser extent, FedEx Corp., which rely on
postal workers for last-mile delivery in certain places. The Postal
Service is only allowed by law to raise its net debt by $3 billion
a year, so the bill loosens that restriction. But it does come with
some strings attached. Mainly, the Postal Service can only use the
financing for operating expenses and not to pay down outstanding
debt. The bill also requires the Postal Service to prioritize
medical shipments and allows temporary delivery points to protect
workers and recipients of mail.
Private-equity firms will likely find it a challenge to get
access to stimulus funds. Based on available details of the
stimulus package, private-equity-owned businesses wouldn't be
explicitly barred from receiving assistance. But government lending
requirements could prevent them from unlocking the aid, say
lawyers, lobbyists and regulatory experts. In most cases, "I don't
think they should be thinking of this federal money as a savior,"
said Howard Glazer, a partner at Ropes & Gray LLP who advises
National passenger railroad Amtrak secured about $1 billion to
cover revenue losses related to the coronavirus. The railroad
industry won enhanced unemployment benefits that account for its
workers not being covered under traditional state-run unemployment
programs. Railroad workers instead receive unemployment benefits
under a program administered by the Railroad Retirement Board. The
bill removes a seven-day waiting period to collect unemployment and
provides $50 million to cover the benefits tied to that waiver. It
also provides $425 million to double biweekly unemployment payments
to $1,200 through July.
Retailers hastened a correction that was already in the works to
a drafting error in the 2017 Tax Cuts and Jobs Act that required
them to expense property improvements over 39 years, instead of in
the first year as was initially intended. Because of the mistake,
retailers, along with restaurants and hotels that made such
improvements over the past two years, overpaid their taxes by as
much as $30 billion, according to David French, the National Retail
Association's senior vice president of government relations. The
bill will allow that money to flow back to these companies. But the
aid is far short of what designer Tory Burch and other retail CEOs
had lobbied for, including direct cash infusions so that they can
continue to pay workers while stores are closed, rent relief and
the waiver of duties and tariffs.
Restaurant owners were encouraged that a range of operations
were set to be eligible for small-business loans. Previous versions
of the loan provision had capped the employee head count at 500,
smaller than many franchised operations, trade groups said. Now,
most franchisees should qualify for the program, they said.
"It's a pretty huge win for franchisees across the board," said
Matthew Haller, senior vice president for government relations at
the International Franchise Association.
Mitch Cohen, owner of three Jersey Mike's Subs shops in Suffolk
County, N.Y., said the stimulus could help keep his business
afloat, if it gets to business owners soon. "How fast are the funds
going to come to the front lines, that's the next concern," said
Mr. Cohen. Brandon Robertson, a Kansas-based owner of nine KFC
restaurant locations, said his biggest hope is to get funding to
keep all 140 of his employees. "We don't want to have to start
over," said Mr. Robertson, a franchisee of the Yum Brands Inc.
The deal would allow businesses and nonprofits with up to 500
workers in a single location to apply through qualifying banks for
loans backed by the Small Business Administration. The loans would
convert into grants that don't have to be repaid for amounts spent
on items such as payroll, rent or utilities, with the grants
reduced when workers are laid off. The loans would be capped at $10
million and cover wages up to $100,000 a year.
Tech companies didn't see much direct assistance from the
proposed funding bill, though hosts for home-sharing giant Airbnb
Inc. would be eligible for small business loans and unemployment
insurance. Drivers and food-delivery workers for companies such as
Uber Technologies Inc. and DoorDash Inc., though considered
independent contractors, qualify for unemployment benefits under
the proposed legislation. Some tech firms even fear being left out.
The draft legislation around loan guarantees for small- and
medium-size businesses could cut out small technology companies and
other startups funded by venture capital partnerships.
Equipment makers, though not a direct beneficiary of handouts,
still cheered the funding package, particularly for helping to keep
their struggling customers afloat and supporting small and
medium-size businesses. Todd Thibodeaux, president and CEO of
CompTIA, the Computing Technology Industry Association said it was
vital for the industry, since much of the IT sector is made up of
companies with fewer than 100 employees.
PERSONAL FINANCE AND TAXES
The law ensures that people who file for bankruptcy don't have
to use stimulus checks to repay past debt, and it extends the time
that bankrupt people have to repay a portion of their debt as a
condition to getting a fresh start. The current repayment time
limit is five years; the bill extends the repayment time frame to
--Katy Stech Ferek
Consumers who fall behind on their debt payments won't
necessarily take a hit on their credit reports. The bill requires
lenders that allow struggling consumers to defer or skip loan
payments to report the borrowers as current on their payments, even
if they are not. Most consumers who were behind on their debts
before the coronavirus crisis will continue to be reported as
The bill requires companies that service federally backed
mortgages to grant a forbearance of up to 360 days to borrowers who
say they have been harmed by the coronavirus outbreak. Servicers
are prohibited from initiating foreclosure and processing
foreclosure-related evictions for 60 days beginning March 18.
Owners of multifamily properties can request a forbearance of up to
90 days, during which tenants cannot be evicted for nonpayment of
rent or other fees.
The law temporarily loosens the rules on hardship distributions
from retirement accounts, giving people affected by the crisis
access to up to $100,000 of their retirement savings without a 10%
penalty. The law doubles the amount 401(k) participants can take in
loans from an account for the next six months to the lower of
$100,000 or 100% of the account balance. (IRAs don't permit loans.)
For retirees, the law suspends for 2020 the mandatory distributions
the government requires most to take from tax-deferred 401(k)s and
individual retirement accounts starting at either age 70 1/2 or age
The law would allow most Americans with federal student loans to
suspend their monthly payments through Sept. 30, 2020, without any
interest accruing. It would also enable employers to make
tax-exempt contributions toward their workers' student-loan
People who don't itemize their deductions would be able to claim
up to $300 for charitable contributions. Businesses get the ability
to apply losses from 2018, 2019 or 2020 to past years' profits and
claim refunds. Restaurants and retailers would benefit from the
fixing of a mistake in the 2017 tax law that curbed their
depreciation deductions on renovations.
Employers would be able to defer paying their share of 2020
payroll taxes. They could then make half of those payments in 2021
and the other half in 2022. In addition, the bill creates a new tax
credit for retaining employees that's aimed at companies that are
too large to benefit from the small-business assistance elsewhere
in the bill. Those employers would be able to get a tax credit
equal to 50% of payroll. That is limited to $10,000 per employee
per quarter, and for employers with more than 100 employees, it is
available only to those companies and nonprofits that had their
businesses limited or closed by government actions.
(END) Dow Jones Newswires
March 25, 2020 22:12 ET (02:12 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.