FEDERAL EMERGENCY ACTION FOR COVID-19
Overview of Federal Emergency Action Related to Coronavirus - (Updated March 20, 2020)
During this public health crisis, I share with you overviews of the two Federal Coronavirus-related emergency packages that Congress recently enacted, including resources related to key benefits. Congress must do more, and I and other lawmakers are working now on a third emergency package to dramatically increase aid to individuals, families and businesses. As the Chairman of the Subcommittee on Worker & Family Support within the Committee on Ways and Means with jurisdiction over Unemployment Insurance and programs that support vulnerable workers, I promise we will move quickly to help protect our citizens during this national emergency. Please contact my office via 773-533-7520 should you have any questions or concerns.
Congressman Danny K. Davis
Overviews of the Two Initial Federal Emergency Bills
- Emergency Package 1 - Focused on Strengthening the Public Health Response via Vaccine Development and Support to Public Health Providers, Increasing State Resources to Address the Crisis, and Aiding Small Businesses: P.L. 116-123 - Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020
- Emergency Package 2 - Focused on Providing Free Testing, Strengthening Food Security, Increasing Health Access via Medicaid, Enhancing Unemployment Insurance, and Establishing New Emergency Paid Sick and Paid Family Leave for Workers: Families First Coronavirus Response Act
Overviews of Key Provisions within Federal Emergency Packages
- Small Business Administration Economic Injury Disaster Loans
IMPORTANT – IL Small Businesses & Non-profits can apply NOW!
Within the Coronavirus Preparedness and Response Supplemental Appropriations Act, 2020 enacted the first week of March, Congress directed $1 billion to the Small Business Administration (SBA) to provide Economic Injury Disaster Loans to small businesses, small agriculture cooperatives, small agricultural producers, and non-profits that are without credit available elsewhere. These loans give small businesses with working capital loans of up to $2 million to overcome the temporary loss of revenue - covering fixed debts, payroll, accounts payable and other bills. They are intended to provide the operating costs that a business would have incurred had the crisis not occurred. Right now, these loans have a 3.75% interest rate for small businesses and 2.75% for non-profits. I am working with other Members of Congress to lower the interest rates to as close to no-interest as possible, but this rate reduction has not occurred yet. On 3/19/20, Illinois received the state disaster declaration; importantly, small businesses and non-profits can start applying NOW at the www.sba.gov website.
Below are key resources on the program. Independent contractors are eligible as well. All of this information should be online. Here are the documents that the SBA officials said are typically needed: SBA Form 5; most recent year’s tax return; signed IRS Form 4506-T to allow the SBA to obtain tax information; schedule of liabilities; and personal financial statement. A business can apply based on projected losses (that is, if your customers have cancelled events in the next few months that were booked, those losses count and you do not need to wait to apply). A business can apply if it continues to operate or if it shuttered and waiting to re-open. SBA officials indicate that it typically takes about 2 weeks for a decision on a loan application and then about 5 days for the business to receive the money. The approval times could be longer for this crisis given that it is a national disaster and not a regional disaster. Historically, about 50% of loan applications are approved. If a business is denied a loan, then the SBA will connect the business with a counseling partner to help them address the concerns seen by reviewers, and the business has 6 months to re-apply. Importantly, the SBA does have translation services if a small business owner does not speak English.
Here are helpful links to resources for small businesses to understand the Economic Injury Disaster Loan program:
- LINK: Press Release from SBA about the Emergency Disaster Loans
- LINK: Guide to Economic Injury Disaster Loan Program
- WEBSITE: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources
- FAQ on Economic about Injury Disaster Loans by House Committee on Small Business
- WEBSITE: https://twitter.com/i/web/status/1240012392379174912
- Emergency Paid Sick Leave and Emergency Paid Family Leave
The Families First Coronavirus Response Act signed into law on March 18, 2020, expands access to emergency paid sick leave and emergency paid family leave, two separate programs designed to help support workers. The paid sick leave is designed to reimburse small businesses 100% of the wages and health insurance premiums (up to $511 per day) for up to 80 hours of leave for eligible full-time and part-time workers who need to self-quarantine, seek a diagnosis or preventive care, or receive treatment for COVID-19. If workers need to care for a family member who is sick/quarantined or out of school due to COVID-19, then the paid sick leave will cover two-thirds of the worker’s regular pay and health insurance premiums (up to $200 per day) for up to 80 hours.
How do small businesses pay the sick/paid leave benefits? Understandably, small businesses are concerned about paying the sick and paid leave benefits. The reimbursement mechanism for small businesses is connected to the current system by which they pay payroll taxes. Given that small businesses will be fully-reimbursed for the benefits and given that these benefit costs will likely exceed the payroll taxes, my understanding is that Treasury expects that businesses can use the funds that that they have already set aside to pay their payroll taxes to provide the benefits. If an employer’s benefit costs exceed their payroll tax liability, the employer will receive a refund from the IRS. Treasury is working on guidance to expedite the ability of small businesses to claim these refunds quickly rather than waiting until the typical payroll-tax-filing deadline.
Are part-time workers covered? Yes, eligible part-time employees are entitled to paid time off sick and family leave benefits for the typical number of hours that they work in a typical two-week period.
Are independent contractors covered? Although independent contractors have no employer to cover their emergency paid sick or family leave, we provide similar tax credits for independent contractors for paid sick and paid family leave. Given that independent contractors typically receive tax credits during the regular tax filing season, we expect Treasury to provide guidance for how these self-employed workers can claim their credits quickly rather than wait till 2021.
Are workers at businesses temporarily shuttered to decrease virus spread covered? Unfortunately, the emergency sick and paid leave policies do not cover employers forced to shutter temporarily in the interest of public health. Congress is working now to help these businesses and workers in the third emergency package. The current sick and paid leave provisions are important initial steps expected to help approximately 87 million workers, but more is absolutely needed right away to help those who are not covered.
- LINK: FAQ on Paid Sick and Paid Family Leave Coverage
- LINK: FAQ on Tax Credits for Paid Sick and Paid Family Leave Coverage
- Unemployment Insurance
Unemployment Insurance is an important economic safety net for workers, but Congress must dramatically strengthen it to help respond to evolving worker needs. The Families First Coronavirus Response Act takes an important first step by dedicating $1 billion to help states ramp up their Unemployment Insurance systems and to encourage states to ease access to unemployment benefits to better help workers affected by the public health crisis. The law dedicates $500 million immediately to states to hire workers and improve their phone and online systems to meet the new demand for help. An additional $500 million is reserved for emergency grants to states that experience at least a 10% increase in unemployment, which is an intentionally low threshold for added federal help. Importantly, to receive the additional emergency aid, states must make it easier for workers to access benefits. I believe Illinois will be eligible for about $58 million, with half coming immediately and half available for emergency assistance.
Congress temporarily eased federal eligibility requirements (e.g., work search requirements, required waiting periods before receiving benefits, experience rating, and separation for “good cause”) for unemployment insurance and states must do the same to receive the additional emergency grants. These changes make it easier for workers affected by the crisis to qualify for Unemployment benefits. Given the nature of the national crisis, the law also eases the requirement of increased unemployment taxes on businesses that have high layoff rates. We are fortunate that Illinois has a more progressive Unemployment Insurance than other states; however, I recognize that unemployment benefits are substantially lower than a real paycheck, paid sick leave, or paid family leave. I am working to get the greatest benefit for workers possible.
- LINK: Overview of Unemployment Insurance by the Committee on Ways and Means
- WEBSITE: https://waysandmeans.house.gov/media-center/press-releases/unemployment-insurance-and-covid-19
- LINK: NYT Overview of Unemployment Insurance
- WEBSITE: https://www.nytimes.com/2020/03/17/your-money/unemployment-insurance-coronavirus.html?searchResultPosition=1