How the Next Stimulus Package May Affect You and Your Small Business

By Tyler Nolley, Summer Associate

The bi-partisan system that governs our country comes with many pros and cons. It provides a space for diverse thoughts and opinions but requires the compromise of agendas which can be a time consuming process when deciphering a plan of action. Since the onset of the COVID-19 pandemic in March, Congress has proposed three different relief packages: the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed with bipartisan support and signed into law by President Trump on March 27, 2020;[1] the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act, which was introduced by House Democrats on May 12, 2020;[2] and the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act, which was introduced by Senate Republicans on July 27, 2020.[3]

The CARES Act was supportive of small businesses and their employees as it enforced the Paycheck Protection Program (PPP). This program provided small businesses with resources needed to maintain payroll for up to eight weeks, hire back employees, and cover applicable overhead expenses.[4] The program prioritized “millions of Americans employed by small businesses by authorizing up to $659 billion toward job retention and certain other expenses.”[5] The recently introduced HEREOS and HEALS Acts are two different proposals for a second relief package. The House and Senate entered negotiations in hopes of finding a common ground that Congress will pass but have not been successful.[6]

Differences Between Democratic (HEROES Act) and Republican Proposals (HEALS Act)

The HEROES Act would assist American employees and their families by providing $1 trillion to pay our vital workers, such as first responders, healthcare workers, teachers, etc., who keep us safe during these unprecedented times and are in danger of losing their jobs.[7] The Act establishes a $200 billion Heroes’ fund to ensure that the essential workers who have risked their lives working during the pandemic receive hazardous pay, and it extends the weekly additional $600 federal unemployment payments through January 2021.[8] Under this Act, Americans would also receive a second $1,200 stimulus check per family member, capping at $6,000 per household.[9] For small businesses, the HEROES Act would require Occupational Safety and Health Administration (OSHA) to issue a standard requiring all workplaces to develop and implement CDC compliant infection control plans within seven days of enforcement.[10] This standard would also prevent employers from retaliating against employees who report infection control problems.[11] Additionally, the HEROES Act would strengthen the PPP established by the CARES Act by ensuring its reach to underserved communities and nonprofits.[12] It would also provide small businesses flexibility by providing $10 billion for COVID-19 emergency grants through the Economic injury Disaster Loan program.[13]

The HEALS Act would give Americans who make less than $75,000 a second $1,200 stimulus check.[14] Additionally, the Act would reduce the current $600 a week unemployment check to $200 a week as a way to disincentivize people from not returning to work.[15] For small businesses, the HEALS Act would separate first time borrowers from businesses that already received PPP loans in March but will need another one.[16] For example, this means that “businesses that received a PPP loan in the first round, can apply again, but only if they have less than 300 employees. Second-time borrowers must show that they experienced a 50% reduction in gross revenues” and they can only borrow up to $2 million this time.[17] First time borrowers must still meet the original parameters established in the CARES Act, which means the business must have less than five-hundred employees, businesses can borrow up to $10 million or 2.5 times their average total monthly costs, and businessowners must attest that their business was affected by COVID-19.[18] The money provided by the loans can be used for renovations required to comply with CDC safety guidelines and personal protective equipment.[19] Under the HEALS Act, Senate Republicans also request there be a five-year moratorium on coronavirus-related lawsuits against businesses, healthcare centers, and schools.[20] This would be enforced through the Safe to Work Act as a way to combat the fear of liability many businesses may feel when deciding to reopen shop during the pandemic.[21] Senator Mitch McConnell has made this provision a “must” part of any compromise bill, as he said, “let me make it clear, there won’t be a bill that passes the Senate that doesn’t have this in it.”[22]

The Effect on Small Businesses

The PPP is designed to encourage businesses to keep their employees on payroll by providing them forgivable loans. According to working paper from the National Bureau of Economic Research, the current program has not restored employment to a level that many expected.[23] However, the HEALS Act’s expansion of this program may be the remedy, as it would target the hardest-hit small businesses, including those with revenue losses of 50% or more over last year.[24]

The liability protection proposed under the HEALS Act would help keep employers, schools and healthcare providers out of court.[25] It would limit the lawsuits brought against them for exposure to COVID-19; however, any gross negligence would still be subject to legal claims. [26]

How Taylor Law Can Help

We understand that times are tough right now, especially for small businesses. As we wait for Congress to arrive at a unified decision, Taylor Law, PLLC is here to help you navigate your business through the pandemic. We can assist with filing your PPP loan application, revising employee contracts, and updating company manuals to coincide with CDC safety guidelines.

For more information or questions regarding the livelihood of your small business during the COVID-19 pandemic please email info@taylorlawdc.com.

[1] https://home.treasury.gov/policy-issues/cares

[2] https://www.congress.gov/bill/116th-congress/house-bill/6800

[3] https://www.republicanleader.senate.gov/newsroom/remarks/mcconnell-outlines-historic-relief-proposal-for-an-important-crossroads-in-this-battle-

[4] https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

[5] Id.

[6] https://www.politico.com/news/2020/08/06/senators-coronavirus-relief-talks-stall-392210

[7] https://appropriations.house.gov/news/press-releases/house-democrats-introduce-the-heroes-act

[8] Id.

[9] Id.

[10] Id.

[11] Id.