The pandemic that is sweeping the world is causing untold suffering, and not only through illness and death. The financial implications of the lockdown to individuals and to businesses have yet to be fully understood. At the moment, everyone is wondering what financial relief is available. This post explores the possibilities open to individuals, businesses, and other entities.
Relief for Individuals
Economic Impact Payment
On March 27, 2020, President Trump signed the CARES Act that included a number of provisions for individuals. The most widely known is the Economic Impact Payment. The amount differed based on your tax filing status and income level, but generally, individuals received $1200 plus $500 per dependent child. By the beginning of May, the federal government had already sent out 110 million direct deposit transfers and 20 million paper checks. All payments ought to be received by the end of May. There is some talk that a second payment may be authorized in the summer.
Student Loan Payments Suspended
The CARES Act also suspended all federal student loan payments (including federal Parent Plus loans) for six months until the end of September. This happens automatically, and no interest will accrue on those loans during this period. Other student loan lenders are offering similar relief, though it likely is not automatically granted. If you have a student loan with an entity other than the federal government, contact it for help.
Expanded Unemployment Benefits
The federal government passed the Families First Coronavirus Response Act on March 18, 2020, and among its numerous provisions, it expanded unemployment benefits. The typical unemployment benefits of $300 per week for 26 weeks have been expanded to 39 weeks, and for the first time, gig workers and freelancers can claim for unemployment benefits.
401(k) Penalties Waived
Generally, if you withdraw money from your 401(k) before retirement, you are subject to a hefty 10% penalty. This penalty has been waived, and you can now take as much as $100,000 from your retirement fund without penalty to help you through this time.
Credit card companies, auto lenders, and others are eager to help consumers through the COVID-19 crisis. If you find yourself temporarily unable to meet your debt obligations, contact your creditors. Various nonproft and charitable organizations are also offering grants to individuals. You can find information at GrantSpace.
Relief to Both Individuals and Small Businesses
Paid Sick Leave
Another part of the Families First bill is designed to help workers in smaller businesses deal with using sick leave to care for their families. It offers 100% pay for two weeks to anyone needing to care for family or needing to take personal sick leave. Companies with fewer than 500 employees will receive a tax credit on next year’s tax bill to offset the cost of providing 2 weeks of full-pay sick leave to their employees.
Relief for Small Businesses
Paycheck Protection Program
The CARES Act included $350 billion for the Payment Protections Program, designed to allow small businesses to continue paying their employees during the lockdown. That original amount was gone within 2 weeks, and many in the public decried the companies approved, as they did not fit the small business category. Congress has approved an additional $320 billion, and these applications are being more stringently examined. The Wisconsin Small Business Development Center has information and assistance about this program.
Economic Injury Disaster Loan and Other Programs
The Small Business Administration has Economic Injury Disaster Loan (EIDL) funds available, though at the moment applications are being accepted from agricultural businesses only. Again, the Wisconsin Small Business Development Center has dedicated staff to help you understand and apply for these loans. This page can also guide you to other programs that provide relief to small businesses.
Other grants and Relief for Small Businesses
There are a number of programs to help small businesses survive COVID-19. Some have specific requirements to qualify (like the Ethnic Minority Emergency Grant). The best way to get the information you need is to look at the Wisconsin Small Business Development Center site or at the national list on Grantspace.
If you cannot find a financially sound way through the COVID-19 crisis, individual and business bankruptcy may be a viable option. Call the experts at Burr Law. We’re here for you.