Relief for People and Small Business as of August 10, 2020

(Getty Images)

As you have most likely heard, on Saturday the President signed four Executive Orders. An Executive Order is an action issued by The President that causes something to be done at their directive.

Here are the four Orders.

  1. Continuation of Enhanced Unemployment Insurance as created in the CARES Act, but at $400 per week until 12-31-20.
  2. Continued moratorium on evictions until 12-31-20.
  3. Continued deferment of payment of Student Loans and accrual of interest until 12-31-20.
  4. Deferment of payment by employees of FICA and Medicare taxes until 12-31-20 for people that earn under $100,000.

These four Actions assist people that are unemployed and people that are struggling to pay rent and or student loans. They also mean a paycheck that will be 7.65% larger for people that earn under $100,000. Thus, both employed and unemployed people have received some form of assistance.

The details of some of this are unclear as to how they will play out eventually.

The additional $400 per week in Enhanced Unemployment Insurance is 75% funded by the Federal Government and 25% funded by the States. Thus, the States must agree to this and fund their portion. This is in addition to the normal state provided Unemployment Insurance. This is retroactive back to the date the original program lapsed, so recipients should get a check to cover the weeks since the original plan ended. There is now loose talk this morning that the Federal Government will indeed pay all 100% of this $400.

The moratorium on evictions keeps people from being evicted for non-payment of rent. Details on this are cloudy, as the landlords certainly have rights as well. More definition to follow. Some people read it as merely a “suggestion” to landlords with a non-defined offer of “assistance”.

The student loan payments are deferred until 2021, but not forgiven. The interest is stopped and does not accrue up to 12-31-20. As written, the amount due will be due once payments begin again in 2021. The President did state he would work with Congress to have the payments between now and the end of the year forgiven. That is not done yet.

The deferment of the employees 7.65% FICA and Medicare taxes for people making less than $100,000 will take place from date of signing until 12-31-20. This will result in a 7.65% larger paycheck. These taxes still be due from the employee in 2021 as these taxes are deferred, not forgiven. The President did state he would work with Congress to have these taxes forgiven. This is not done yet.

The two large remaining issues for small businesses, and Live Events in specific, are additional business funding and COVID Liability Indemnity. Neither of these were addressed in the Executive Orders. Both sides continue to state a willingness to continue negotiations and return to talks. Indeed, those talks will resume today.

As of today, it is still unclear if the language in HEALS or RESTART will be the basis for additional small business funding. There is agreement from both sides of the aisle that businesses severely impacted by COVID closures do need additional funding to survive. RESTART continues to gain support and momentum. Thursday 3 more Senators cosigned to support the bill bringing the total to 51. Friday 13 House members signed to co-sponsor the bill bringing the total to 91 House members. The support is bipartisan and continues to gain support. Almost half of our Senators and Congresspeople now support RESTART, which is encouraging. We should have a clearer picture today and tomorrow as negotiations continue.

Simply stated, RESTART would allow an impacted small business to claim up to 45% of 2019 gross income. Whatever percentage of that money is spent on payroll, payroll related expenses, rent, mortgage interest, note interest and a few other costs will be forgivable. The balance will be, as of now, a 7 year 2 or 3% loan. There would be no payments in year one and interest only in year two. All these details are subject to change, and there is a large push to make the loan longer term and at 1% interest.

On the Liability Indemnity front, there continues to be entities and forces far larger than our industry that are calling for this legal protection. These negotiations range from no protection whatsoever to blanket indemnity, and all things in between. This too will become clearer today and tomorrow.

The big stumbling block at this point is money for states. I have shared with you for weeks that I feared this would be the one item that would hold up this bill, and indeed it is. The Democrats are requesting $915 billion dollars for state relief and the Republicans are requesting $150 billion dollars for state relief. This is the single biggest point of negotiation now, and unless and until this is worked out, everything else sits idle. It has been suggested that small business relief be presented in a clean stand-alone bill. From one point of view, passage of RESTART as a clean bill would immediately help the struggling small businesses in the US. This idea is now gaining support as well, though I am not sure how likely it is.

There will be updates provided when more information becomes available as to where the negotiations seem to be as a starting point. Once we know the starting point, we can decide on our next call to action.

There is one possible action that could take place that needs to be considered. It is possible that someone challenges the legality of the Presidents Executive Orders in court. If this occurs, all the orders will be halted until the court decides on the legality. It is unknown as to whether these orders will be challenged. If they are challenged, the Enhanced Unemployment Insurance money will not flow, and evictions can take place. Student loan payments will be due and payroll taxes will be paid as normal.

To restate, both sides of the aisle have reconfirmed this morning they are willing to come to an agreement and indeed will, as the American people need this next relief bill. There is a widely held, bipartisan belief that an agreement can and will be hammered out and this next relief bill will indeed be delivered.

Thank you and please stay tuned for further details.

Michael T. Strickland

[email protected]


Suggested Articles:

Analog Way has combined forces with SNA Displays, one of their top high-end displays partners, to drive a new LED spectacular in midtown Manhattan.

AC Power Distribution announced the sale of a large complement of its new SIDECAR-DMX data distribution systems to MBS Equipment Company.

Working Class Audio, a pro-audio-focused podcast by Bay Area audio engineer, musician, author, & educator Matt Boudreau, celebrated its 300th episode.