Federal Response to COVID-19
This page highlights federal policy changes in 2020 related to the Coronavirus and how these changes impacted Arkansas.
Paycheck Protection Program and Health Care Enhancement Act
Signed into law April 24, 2020
The $484 billion Paycheck Protection Program and Health Care Enhancement Act was signed into law April 24, 2020. This legislation contains relief for small businesses, healthcare providers, rural areas and other groups negatively impacted by COVID-19. These new relief measures build upon the Coronavirus Aid, Relief, and Economic Security Act or “CARES” Act which was signed into law on March 27, 2020. Find out more about this legislation by clicking on a question below or reading our policy brief.
The Paycheck Protection Program (PPP), which is intended to assist small businesses in overcoming financial hardships due to COVID-19 through forgivable loans, has entered a second round of funding. Congress added $320 billion to the PPP through the Paycheck Protection Program and Health Care Enhancement Act which was signed April 24,202. This new funding is intended to replenish the Paycheck Protection Program, which loaned the initial $349 billion allocated in the CARES Act passed on March 27, 2020. The original PPP fund was quickly depleted due to elevated demand from small businesses across the nation.
Approximately one-fifth of the new funding for the PPP, $60 billion total, will be set aside for smaller financial institutions. Reserving a portion of these funds for smaller lending institutions is designed to help reach the types of businesses that missed the first round of PPP funds. Half of this set-aside funding, $30 billion, will be reserved for insured banks, savings association and credit unions with assets between $10 billion and $50 billion. The other half, another $30 billion, will be set aside for community financial institutions and smaller insured depository institutions and credit unions (with assets less than $10 billion).
Aside from reserving a portion of funds for smaller lending institutions, much of the PPP legislation remains the same from the original CARES Act. Financial institutions, backed by the Small Business Administration (SBA), will still administer the loans to small businesses and there is still a path to loan forgiveness for small businesses that participate.
Funds for these loans are still provided on a first-come-first-serve basis, just like in the original CARES Act legislation. This means small businesses must act quickly, and not all are guaranteed to receive a loan.
The types of businesses that qualify as “small businesses” under the Payment Protection Program (PPP) have not changed from the original CARES Act legislation. Businesses with fewer than 500 employees qualify as small businesses, as do businesses with several locations as long as there are fewer than 500 employees per site.
There are cases where organizations can still be considered “small” even if they have more than 500 employees when they meet certain standards. These employee-based and revenue-based standards are different for every industry, and can be found on the Small Business Administration (SBA) website. A list of organizations participating in the PPP in Arkansas can also be found on the SBA website.
The Paycheck Protection Program and Health Care Enhancement Act expands eligibility for the Disaster Loans and Emergency Injury Disaster Loan (EIDL) programs to include small agricultural enterprises. Agricultural businesses were already eligible for PPP. For the purposes of this legislation, small agricultural enterprises include businesses with fewer than 500 employees that are engaged in farming and agriculture related activities, including but not limited to: ranching, food production and aquaculture. A full definition can be found in section 18(b) of the Small Business Act (15 U.S.C. 647(b)).
You can read the full Paycheck Protection Program and Healthcare Enhancement Act online.
Coronavirus Aid, Relief, and Economic Security Act or “CARES” Act
Signed into law March 27, 2020
The Coronavirus Aid, Relief, and Economic Security Act of 2020 (the CARES Act) is a wide-ranging, 335-page piece of federal legislation that provides $2 trillion in economic relief. This legislation comes in response to the economic impacts of COVID-19 and contains multiple forms of assistance for individuals, businesses, hospitals and health care systems, higher education and state and local governments. Assistance comes in many forms, including cash payments, new loan and grant programs, enhanced unemployment benefits, technical assistance, payment flexibility on some federally backed mortgage loans, moratorium on evictions and others.
Read our guide to the 2020 CARES Act for a summary of each component of this legislation. Our Community, Professional and Economic Development team has also answered some of the big questions about what this historic legislation means for Arkansas below.
Perhaps the most publicized provision of the CARES Act is the $349 billion Paycheck Protection Program, which is designed to help small businesses, independent contractors and self-employed people stay afloat despite the negative financial impacts of COVID-19. The program provides short-term assistance through loans to cover costs like payroll, health insurance premiums, utility bills, interest on existing debt and business rent or mortgages.
On April 16, the Small Business Administration stopped accepting applications for this program because current funds have been exhausted.
Other support for businesses included in the CARES Act includes, but is not limited to:
- Expansion of the Economic Injury Disaster Loan (EIDL) program to entities formerly ineligible and $10 billion in grants to support this program.
- $17 billion in subsidies for existing SBA 7(a) loans, 504 loans, or microloans.
- Temporary changes to Small Business Administration (SBA) loan rules and bankruptcy eligibility and plan modifications.
- Funding for small business development centers and other entities to provide additional technical assistance for small business.
Other employers, not just small businesses, are eligible for provisions to manage the economic impact of COVID-19. This includes employers who avoid laying off or furloughing their workers, employers who are forced to fully or partially shut down, or those who suffer major losses in gross receipts.
Employers and the self-employed will be able to defer their portion of Social Security taxes under this provision. Half of the deferred tax must be paid by December 31, 2021 with the remainder due December 31, 2022.
The CARES Act is also designed to help businesses manage liquidity by allowing companies, pass-through businesses, and sole proprietors to have more flexibility in the treatment of net operating losses. Certain companies may also be able to recover Alternative Minimum Tax Credits for an immediate refund or increase deductible business interest expenses.
The bill also additional funding for rural business programs administered by the U.S. Department of Agriculture (USDA) and the Distance Learning, Telemedicine, and Broadband Program. In response, USDA recently announced a second round of applications for its Distance Learning and Telemedicine (DLT) grant program with an application deadline of July 13, 2020.
Many Arkansas workers who are laid off, or whose jobs are otherwise impacted by the Coronavirus may be eligible for assistance under the “Pandemic Unemployment Assistance” program through December 31, 2020. This program expands federally funded unemployment insurance (UI) benefits to many workers who would not typically be eligible, such as the self-employed, independent contractors, those with limited work history, and workers who have used all of their state-funded UI benefits.
The CARES act also extends UI benefits by up to 13 weeks and provides a $600 a week federally-funded increase in benefits for up to four months. Arkansas has already waived the typical one-week waiting period that normally applies to workers seeking to claim these benefits. Some additional assistance is also provided specifically for aviation workers.
The vast majority of Arkansans will receive, or have already received, individual rebates via check or direct-deposit because of CARES Act legislation. All U.S. residents who have a social security number and are not a dependent of another taxpayer are eligible, and the amount of the benefit varies based on income and family size. Adults with annual income up to $75,000 will receive $1,200 or $2,400 for a married couple with combined income of up to $150,000, plus another $500 per child. The rebates are reduced for individuals or couples with higher income levels. This rebate does not count as income and is not taxed. Anyone who qualifies can receive the economic stimulus payment even if they have not filed taxes. Non-filers can enter their information online at the IRS website.
Families across the nation are expected to experience financial hardship during the COVID-19 public health emergency. The CARES Act legislation anticipates this by increasing funding for programs like SNAP, or “Food Stamps” ($15.5 billion), the Emergency Food Assistance Program ($450 million), and federal child nutrition programs ($8.8 billion) including the National School Lunch and Breakfast Programs, the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), the Child and Adult Care Food Program (CACFP) and the Summer Food Service Program (SFSP).
Other benefits include, but are not limited to:
- More flexibility to make withdrawals from retirement accounts to cover coronavirus-related financial stress, such as being quarantined, furloughed, laid off, or having work hours reduced. The 10-percent early withdrawal penalty for retirement accounts is temporarily waived (up to $100,000). The provision also temporarily allows retirees to withdraw less than normally required on certain defined retirement plans and IRAs and to spread out tax payments for up to three years.
- Foreclosure protection for individuals and families by temporarily halting eviction filings and foreclosures of federally backed mortgages among other provisions.
The CARES Act set aside $150 billion for the Coronavirus Relief Fund to be distributed to states, tribal areas and U.S. territories. Arkansas is expected to receive $1.25 billion from this fund. Because Arkansas doesn’t have any local government meeting the population threshold, the full amount will be distributed to the state. These payments can only be used to cover new expenses due to the COVID-19 public health emergency that were incurred between March 1, 2020 and December 30, 2020. States cannot use this money to pay for regularly planned budget items such as roads or teacher salaries.
At this point, it us unknown how Arkansas’s share of Coronavirus Relief Funds will be used. The Governor’s office is currently assessing needs and will make those decisions in the coming days. We will provide an update when that information becomes available. For a more complete description of assistance available to local governments, see the National Association of Counties (NACo) summary of the CARES legislation.
The CARES Act supports the health care system during the COVID-19 pandemic by addressing medical supply shortages, innovation in medical research and development, and support for the healthcare workforce and providers. Many counties in Arkansas may benefit from portions of this legislation that support access to care in rural areas including $1.32 billion in fiscal year 2020 for community health centers to test and treat of COVID-19 patients, the reauthorization of grants for community health in rural areas, and grants that support telehealth and expanding other telehealth flexibilities. The bill also provides $25 million for the Distance Learning and Telemedicine Program, which helps to provide broadband services in rural communities to support critical health, workforce development and educational services.
Arkansas Hospitals may also be able to immediately write off facility improvement costs instead of depreciating them over time due to the CARES Act. This legislation also supports training and workforce programs for healthcare professionals and protects volunteer medical professionals from certain liabilities.
You can read the full CARES Act legislation online.
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