The emergency CARES Act that Congress approved, and the President has now signed will offer retailers some stability as they respond to the COVID-19 pandemic.
The Federal Reserve is still finalizing details of some of the relief programs. But the fundamentals of the act break down as follows:
- Small Business “Paycheck Protection Program” provides $350 billion to support loans through a new Paycheck Protection Program for small employers with 500 employees or fewer. Learn more here.
- $454 billion in loans for retailers to keep operating
- Business tax relief. This would allow retailers to carry back losses this year to profitable years, an Employee Tax Credit to encourage retailers to keep employees on the payroll, and an expanded deduction of interest paid on retail business loans.
- Extended unemployment benefits primarily for laid off workers to 39 weeks of benefits; $600 supplements to unemployment checks; and direct payments of $1,200 to individuals and $2,400 for couples.
The $2.2 trillion relief plan will actually pump an estimated $6 billion into the economy when adding in the financial leverage of the Federal Reserve.
This is a significant amount of help that Congress worked out under great pressure. But, depending on how long the pandemic lasts in the U.S., it might not be enough help. Already, Congress and the President are contemplating yet another wave of financial relief to lessen damage to the national economy.
For now, though, the CARES Act is an important start toward recovery. It provides a historic amount of liquidity to rescue retailers and jobs while lightening the tax burden on businesses when they need it the most. Importantly, the act also helps consumers to help meet their basic obligations until they can return to a normal way of life.
The SBA loans are forgivable if retailers are able to retain employees. These loans will be particularly important for our small businesses who have been forced to close their doors. But essential groceries, pharmacies, banks, home improvement stores and others also will need help from loans to tide themselves through until the pandemic recedes as a threat to lives.
The sacrifices being asked of all of us represent an enormous challenge especially because we can’t predict when the pandemic will be under control and our communities will once again be open for business. Employers and employees alike have many questions about how to proceed in their efforts to recover. In the meantime, please visit our online Retailer Resource Guide that updates regularly with help for employers and employees as they navigate forward.