Small construction firm owners and workers are all wondering how we will be impacted by the $2 trillion coronavirus relief package that was recently signed by President Donald Trump. Here are some key takeaways from this bill.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
The CARES Act is going to impact employers in a variety of different ways with significant provisions for federal loans, payroll costs, loan forgiveness, enhanced unemployment benefits, retirement funds, employee retention credit and tax credits. More than $40 billion is expected to be directed to the construction industry for emergency mitigation efforts during the COVID-19 pandemic. Projects dedicated to increasing hospital capacities are being considered a top priority to receive funds. There will also be other grants for transit infrastructure, airport improvement, community development and economic development. Companies with 500 or fewer employees can take advantage of some of these programs:
- Paycheck Protection Program and Loan Forgiveness – Eligible small businesses can receive federally guaranteed loans to cover payroll costs and other payments ranging from rent and utilities to interest on any mortgage obligation, and interest on any other debt obligation incurred before the covered period. Currently $349 billion has been allocated towards the Paycheck Protection Program (PPP) and congress is working on an addition $250 billion.
- Employee Retention Credit – Small business owners can claim payroll tax credits on qualified wages paid to employees after March 13, 2020.
- Delayed Payment of Social Security Taxes – Employers can delay and even split the payment of this year’s Social Security taxes between 2021 and 2022.
- Advance Refunding of Tax Credits – Employers that may be facing cash flow problems during this time can offset them by requesting an advance of anticipated tax-credits and refunds.
Individual Relief
The new legislation provides direct payments to individuals and couples based on their annual gross income. For instance, couples that earn less than $150,000 per year will receive $2,400. Individuals who earned less than $75,000 will receive $1,200. The program also provides $500 per child (capped at two) per family. People working on the frontlines of the pandemic might be eligible for additional benefits in the form of bonuses, hazard pay, etc., as $100 billion is being given to hospitals. The Pandemic Unemployment Assistance Program is being offered to certain covered individuals that are unemployed or partially unemployed due to COVID-19.
According to the IRS, economic impact payments will be distributed automatically in the next three weeks. Otherwise, the ball is in the hands of states and localities to determine how much of the federal funds will go toward construction projects or other operations.
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