To date, federal relief efforts related to the coronavirus have centered on programs providing disaster relief loans to small businesses affected by the sudden decline in economic activity and on postponing tax payments for businesses for a period of 90 days.
U.S. Treasury Secretary Steve Mnuchin announced that individuals (including the self-employed) and all other entities other than C-corporations should file their federal taxes on July 15. No additional forms are needed to qualify for this relief, according to the IRS. The income tax payment deadlines for C-corporations are also being automatically extended to July 15 for up to $10 million of their 2019 tax due.
Under the newly enacted Coronavirus Preparedness and Response Supplemental Appropriations Act, the Small Business Administration (SBA) will be able to issue under its own authority an Economic Injury Disaster Loan declaration once it receives a request for disaster relief lending from the governor of a state or territory. During the outbreak, the SBA may provide targeted, low-interest loans to nonprofits and small businesses in specific counties impacted by COVID-19. The SBA has an established Economic Injury Disaster Loan (EIDL) program which offers working capital loans of up to $2 million for economic support and assistance with temporary revenue loss. Once a declaration has been issued for substantially impacted areas within a state, the following will occur:
- The information on the application process for EIDL assistance will be made available to impacted communities.
- The loans may be used to pay fixed debts, accounts payable and any other bills that may be difficult to pay because of the outbreak’s impact.
- Small businesses will receive the loans for 3.75%, but only if they have no credit available elsewhere; businesses with alternative credit options are not eligible.
- Nonprofits will receive an interest rate of 2.75%.
- SBA will offer long-term repayment plans, up to a maximum of 30 years. Terms are determined on a case-by-case basis based on the borrower’s ability to repay.
Further, the Internal Revenue Service has released Notice 2020-15 which protects High Deductible Health Plans (“HDHP”). If such a plan otherwise fulfills the requirements of an HDHP under Section 223(c)(2)(A), the plan will still be an HDHP and covered employees remain eligible, even if it provides for medical care services and purchases related to COVID-19 testing or treatment prior to meeting the applicable deductible.
Future Actions:
Members of the Trump administration are currently developing rescue packages for highly impacted business sectors, such as airlines and hospitality. The House of Representatives has passed H.R. 6201: Families First CoronaVirus Response Act, an aid package for workers, and the Senate is expected to consider it in the coming days. A link to a summary of this legislation can be found here. We will keep you abreast of further developments regarding federal coronavirus relief as they come about.