The latest COVID-19 relief bill is currently being considered by the federal government. It’s an 1815-page bill called the ‘Health and Economic Recovery Omnibus Emergency Solutions Act", or HEROES Act. It contains $3 trillion in funding, far surpassing the original $2 trillion CARES Act.
Here’s a preview of the potential measures to come in this new bill being touted as a sequel to the CARES Act. Note that this bill has been passed by the House, but not the Senate, where major changes to the bill are expected. The Senate has proposed their own $1 trillion bill called the HEALS Act. We’ll keep this article updated with the latest information.
Employee retention credits
Employee retention credits were introduced in the first CARES Act. The HEROES Act would expand this program, raising the maximum funding limit per employee from 50% of the first $10,000 in qualified wages per employee to 80% of the first $15,000.
Business interruption credit
This is a new program that would allow certain self-employed individuals to claim a tax credit equal to 90% of their income on their 2020 federal tax return.
Paycheck Protection Program (PPP)
The Paycheck Protection Program is a massive funding program that provides forgivable loans to small businesses.
The following changes are being proposed to the PPP in the HEROES Act:
- An extension of the program from June 30 to December 31
- A restriction on returned PPP funds: returned funds can only be used to fund new loans to companies with 10 or fewer employees
- More exemptions on forgiveness. If you are unable to rehire an employee, or can demonstrate you could not find a suitable replacement, your forgiveness amount will not be reduced because of that
- Removal of the “75/25” rule, where previously no more than 25% of the PPP amount could be used on non-payroll expenses
- Reduced restrictions on eligibility, allowing more businesses to apply
- Funding for small banks and credit unions to help update their banking systems
Small Business Protections
The bill proposes new protections against debt collection from small businesses during the pandemic. During the pandemic, activities such as repossessions, wage garnishments, and evictions should not be made or threatened.
Main Street Lending Program
The Main Street Lending Program was originally established to provide $600 billion in four-year loans with a minimum size of $1 million to small and mid-sized businesses.
The HEROES Act would expand this program to allow smaller businesses to apply.
Pandemic Unemployment Assistance
The HEROES Act would extend the Pandemic Unemployment Assistance program from December 31 to January 31, 2021
How does the HEROES Act compare to the HEALS Act?
Both proposals have some major changes that small business owners may wish to take advantage of. Read our comparison.