Federal COVID-19 Relief What is happening? Since the coronavirus hit the United States in late January of 2020, the global pandemic has triggered two major challenges for both the public and private sectors of the United States: o First, preventing the overall healthcare system from becoming overwhelmed due to the rapid spread of COVID-19 to the extent that the system is unable to adequately care for Americans; and o Second, ensuring that the American economy, businesses and workers are not irreparably damaged by public health policies to a degree that an economic crisis could match the potentially crippling effects of a public health crisis. While states and local governments, healthcare providers, and American businesses have been on the frontlines of both crises, the scale of this event has required extensive federal resources, authorities, and overarching guidance. This is the case in most national emergencies because, generally speaking, in times of national crisis local governments are forced to depend heavily upon the guidance and response of state governments which in turn depend heavily upon resources and authorities granted to them by federal agencies, Presidential declarations, and Congress. This situation has especially been the case with the coronavirus pandemic, because it has affected programs that are largely managed and funded federally, like unemployment benefits, healthcare plans and policies, and financial regulations. By March of 2020, policymakers realized the crisis was escalating and would require a significant and holistic response. Why was it necessary for Congress to get involved? Because the impacts of public health policies (social distancing and quarantining) have so rapidly changed the economic landscape of the United States and healthcare providers are in such need of supplies and personnel that the constraints of existing laws, federal regulations, and funding has threatened to prevent the United States from overcoming the crisis. Bottom line: this onetwo punch of a public health and economic crisis has threatened the stability of the United States to the extent that only Congress has enough authority and resources to intervene. What has Congress done? Congress began to enact emergency legislation in early March and has thus far enacted three significant pieces of legislation to provide temporary, emergency flexibility in the law, to provide federal agencies with additional authorities to help state and local governments, businesses, and workers, and to provide extensive resources to both the public and private sectors to protect America’s economic future. The below enclosed information highlights specific programs and funding that may be of interest to members and stakeholders of the Montgomery Area Chamber of Commerce. It focuses heavily on the relief legislation most recently passed by Congress, the nearly $2 trillion Coronavirus Aid, Relief, and Economic Security Act, or “CARES Act�, but will include elements of other coronavirus legislation as it relates to specific programs or funding.
Topline Overview (Organized by Impacted Group)
Federal Emergency Relief Enacted by Congress in Response to the Coronavirus Businesses (general) o Creates a $500 billion lending fund for loans, loan guarantees, and investments in the Federal Reserve’s lending facilities for certain eligible businesses o Creates an Employee Retention Tax Credit (an advance tax credit for employers subject to closure due to COVID-19) o Allows for a delay in payment of employer payroll taxes o Provides tax modifications for operating losses during tax year 2020 o Eliminates tax limitation on losses for taxpayers other than corporations during tax year 2020 (farm losses and excess business losses) o Modifies credit for prior year minimum tax liability of corporations o Amend the changes to the family and medical leave and sick leave policies established by the Families First Coronavirus Response Act to limit the total amount employers may have to pay under each benefit o Temporarily exempts from excise tax alcohol used to produce hand sanitizer Small Businesses o Expands eligibility and increases availability of 7(a) Loans (“Paycheck Protection Program”) o provides loan forgiveness for certain qualifying expenditures o Makes available Emergency Economic Injury Disaster grants for up to $10,000 per business in the form of a loan advance o Increases the maximum loan for a SBA Express loan from $350,000 to $1 million through December 31, 2020 o Requires Veteran’s fee waivers for the 7(a) Express loan program to be permanently waived. o Expands bankruptcy relief o Encourages the creation of a Main Street Lending Program that supports lending to small and mid-size businesses (subject to guidance from U.S. Secretary of the Treasury) o Allows the DOD to waive certain restrictions on the usage of other transaction authority in contracts to improve defense industrial base liquidity, particularly among small businesses, in its response to COVID-19 Grants to entities that support small businesses o Entrepreneurial Development Grants o Minority Business Development Grants Individuals (displaced workers and employees) o Unemployment Benefits o Temporarily increases eligibility based on COVID-19 impacts
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o Provides an additional $600 in addition to amounts typically provided o Waives the typical “waiting week” requirement for individuals so that they may begin receiving benefits immediately o Increases benefits period from 3 months to 4 months o Note: individual states must apply to USDOL to take advantage of the expanded COVID-19 unemployment benefits program Direct payments of up to $1,200 for single tax-filers that make $75,000 or less, and $2,400 for joint tax-filers that make $150,000 or less. Families would receive an additional $500 per child. Extends the federal tax filing deadline from April 15 to July 15, 2020. Provides for temporary credit protection Provides a temporary moratorium on foreclosure due to delinquency on a federally backed mortgage Provides a temporary moratorium on eviction filings
States o Provides $454 billion for loans, loan guarantees, and investments in support of facilities established by the Federal Reserve to support lending to eligible businesses, states, and municipalities o Provides support to States implementing the expanded COVID-19 unemployment benefits program through the U.S. Department of Labor o Provides temporary hiring flexibility to states (ex: ADOL) to quickly process applications and claims o Provides technical assistance o Provides 100% reimbursement of qualifying unemployment benefits o Provides administrative grants o offers states the opportunity to enter agreements with the federal government to receive funding for state-enacted “short-time compensation” programs to subsidize employees who have their hours reduced in lieu of a layoff, where the federal government would fund the delta between reduced hour payments and the UC benefit o Deems all states and their subdivisions to have sufficient economic damage to small business concerns to qualify for assistance under the SBA loan program (rather than the current state declaration and certification approach). o Increases Medicaid financing o Provides direct, formula-based payments to states to cover costs incurred to fight COVID19 (estimated state share) o No state will receive less than $1.25 billion o Federal Highway Administration – Language to clarify that states can issue special permits for overweight vehicles and loads to allow for the free flow of critical relief supplies during the current coronavirus epidemic for the duration of the fiscal year. o Grants and financial relief opportunities:
o $400 million - ELECTION SECURITY GRANTS – The bill provides $400,000,000 to the Election Assistance Commission to provide grants to the States in response to the coronavirus for the 2020 election cycle. o $345 million - Dislocated Worker National Reserve for states and communities to respond to the workforce impacts and layoffs resulting from the coronavirus. o CDC State and Local Preparedness Grants: $1.5 billion in designated funding for state and local preparedness and response activities. o $3.5 billion - Child Care and Development Block Grant: $3.5 billion in grants to states for immediate assistance to child care providers to prevent them from going out of business and to otherwise support child care for families, including for healthcare workers, first responders, and others playing critical roles during this crisis. o $750 million - Head Start: $750 million for grants to all Head Start programs to help them respond to coronavirus- related needs of children and families, including making up for lost learning time. o $900 million - Low Income Home Energy Assistance Program: $900 million in grants to states to support immediate home energy assistance for low-income households affected by coronavirus. o $45 million - Child Welfare Services: $45 million for grants to states to support the child welfare needs of families during this crisis, and to help keep families together. o $30 billion - Education Stabilization Fund: Flexible funding that will get out the door quickly and go directly to states, local school districts, and institutions of higher education to help schools, students, teachers, and families with immediate needs related to coronavirus, including: o $1.5 billion – National Guard support for DOD and the States - for emergency deployments of Guard personnel o $850 Department of Justice Grants, Byrne JAG: to assist state, local, and tribal officers in responding to coronavirus. These funds will go directly to state and local governments, with no match required, and will support criminal justice needs related to coronavirus, including overtime for state, local, and tribal officers; personal protective equipment and supplies; and medical needs and other supplies for inmates in state, local, and tribal prisons, jails, and detention centers. Municipalities o Provides $454 billion for loans, loan guarantees, and investments in support of facilities established by the Federal Reserve to support lending to eligible businesses, states, and municipalities o Provides direct, formula-based payments to municipalities with populations over 500,000 to cover costs incurred to fight COVID-19 o Municipalities with fewer than 500,000 will still qualify to receive a portion of this funding received by the state o Grants and financial relief opportunities:
o $45 billion for the federal Disaster Relief Fund administered by FEMA - for eligible categories of activities, including emergency protective measures such as medical response, personal protective equipment, and other types of personnel and procurement costs. o $1.5 billion for the Centers for Disease Control for state and local grants/cooperative agreements to carry out surveillance for COVID-19, laboratory capacity to test for COVID-19, infection control and mitigation, and other preparedness response activities o Substance Abuse and Mental Health Services Administration (SAMHSA) - at least $100 million for emergency response grants to address mental health, substance use disorders, and provide resources to the homeless in local communities o $4 billion in Homeless Assistance Grants under the Emergency Solutions Grants program - amount will be allocated directly to a state or unit of general local government by formula, and allocations must be made within 90 days of enactment. o $1 billion - Community Services Block Grant: $1 billion in direct funding to local community-based organizations to provide a wide-range of social services and emergency assistance for those who need it most. o $30 billion - Education Stabilization Fund: Flexible funding that will get out the door quickly and go directly to states, local school districts, and institutions of higher education to help schools, students, teachers, and families with immediate needs related to coronavirus, including: o $5 billion - Community Development Block Grant. CDBG is a flexible program that provides communities and states with funding to provide a wide range of resources to address COVID-19, such as services for senior citizens, the homeless, and public health services. Funding will be distributed using formula. o $850 Department of Justice Grants, Byrne JAG: to assist state, local, and tribal officers in responding to coronavirus. These funds will go directly to state and local governments, with no match required, and will support criminal justice needs related to coronavirus, including overtime for state, local, and tribal officers; personal protective equipment and supplies; and medical needs and other supplies for inmates in state, local, and tribal prisons, jails, and detention centers. Financial Institutions & Lenders o Directs the U.S. Secretary of the Treasury to issue additional guidance to lenders with regard to the administration of expanded loan and grant programs created in response to COVID-19 within 10 days of the enactment of the CARES Act o Lenders authorized to make loans under the SBA’s current Business Loan Program are automatically approved to make and approve loans under this new program, and they may opt to participate in the program under the terms and conditions established by the U.S. Department of Treasury
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o The Treasury Secretary may extend such authority to additional private sector lenders under criteria established by Treasury (including, for instance, allowing additional lenders to originate loans) Directs the SBA Administrator to provide guidance to lenders with regard to the SBA Disaster Loan Program within 30 days from enactment of the CARES Act o Directs the SBA Administrator is issue guidance to ensure that processing and disbursement of covered loans prioritizes certain criteria o Lenders are required to provide certain loan forgiveness during the covered period (if secondary market investors decline to approve a lender’s deferral request, the Administration must purchase the loan) o Within 90 days of determining the ultimate forgiveness amount, the Administrator must remit payment plus interest accrued through the date of payment to the lender. Authorized lenders and secondary market participants (at the discretion of the Administrator) may report expected forgiveness amounts, up to 100% of principal, on program loans or on pools of such loans. The Administrator must purchase the expected forgiveness amounts in such reports within 15 days. Lenders who rely on documentation and accompanying certifications are held harmless from SBA enforcement actions and penalties relating to the loan forgiveness For participating lenders in the SBA Disaster Loan program, sets forth compensation (based on loan balance at time of disbursement) of: o 5% for loans of $350,000 or less o 3% for loans above $350,000 and less than $2 million o 1% for loans $2 million and above With respect to SBA Disaster Loan Program, directs the SBA to encourage lenders to provide payment deferments, when appropriate, and to extend the maturity of covered loans, so as to avoid balloon payments or any requirement for increases in debt payments resulting from deferments provided by lenders" during the COVID-19-declared emergency Instructs the SBA Administrator to work with the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of Currency, and state banking regulators to: o Not require lenders to increase their reserves based on payments received from the SBA o Waive statutory limits on maximum loan maturities for certain covered loans o Extend lender site visit requirements to account for volume increases, travel restrictions, etc., during the COVID-19 emergency Allows for a guarantee of deposits held by insured depository institutions to be treated as a debt guarantee program. Suspends GAAP for COVID-19 Loan Modifications
Hospitals and Healthcare Industry o $117 billion in new funding for urban and rural hospitals and health systems o Establishes a $127 billion emergency fund for hospitals and health systems o Enacts a Medicaid Disproportionate Share Hospital (DSH) cut delay
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Temporarily eliminates the Medicare sequester Establishes a Medicare diagnosis-related group (DRG) add-on payment Increases funding for the Public Health and Social Services Emergency Fund Provides additional funds to providers caring for Medicare beneficiaries Increase Medicaid financing for states. Changes policies regarding the provision of home-based health care services, which seeks to increase access and decrease patient risk during the emergency period Changes policies regarding the provision of telehealth services, which may increase access during the emergency period Addresses access to health care supplies, including medications though: o requiring that certain medical supplies and drugs be included in the strategic national stockpile o require the U.S. Department of Health & Human Services to enter into an agreement with the National Academies to produce a report assessing and evaluating the medical device and pharmaceutical supply chain o requiring additional manufacturer notification and reporting requirements in response to drug shortages o placing new requirements on device manufacturers to notify the HHS Secretary of potential or likely shortages due to discontinuance or interruption during or in advance of a public health emergency Expands the types of diagnostic tests that must be covered by certain payers and clarifies several aspects of coverage reimbursement. Directs HHS to carry out a Blood Supply Awareness Campaign Expands rural health care services outreach grants, rural health network development grants, and small health care provider quality improvement grants
Additional Appropriations (Funding) These are highlights of appropriations lines that may be relevant to businesses, nonprofit organizations, defense contractors, or other corporate or government entities in the Montgomery area. A comprehensive list of appropriations by program can be provided upon request. • • • • • • •
$349 billion for SBA loan guarantees $240 million for small business development centers and women’s business centers for technical assistance for businesses $25 million for resource partner associations to provide online information and training, $10 million for minority business centers for technical assistance for businesses, $10 billion for emergency EIDL grants, $117 Billion for Hospitals and Veterans Health Care $45 Billion for the FEMA Disaster Relief Fund $25 million - DISTANCE LEARNING, TELEMEDICINE (DLT), AND BROADBAND PROGRAM – The bill provides additional funding for the DLT grant program, which supports rural communities’ access to telecommunications-enabled information, audio, and video equipment, as well as related advanced technologies for students, teachers, and medical professionals.
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$1.5 billion - Economic Development Administration –to support economic development grants for states and communities suffering economic injury as a result of the coronavirus. $50 million - Manufacturing Extension Partnership (MEP) –to be distributed among the 51 MEP centers to help small- and medium-sized manufacturers recover from the economic impacts of coronavirus. The bill also waives the statutory cost-match requirements for all FY2020 funding. $1 billion for the Defense Production Act to increase access to materials necessary for national security and pandemic recovery $627.8 million - NON-MEDICAL PROTECTIVE EQUIPMENT AND OTHER SUPPLIES – For the procurement of pharmaceuticals and physical protection equipment by the military Services for installations, ships, first responders; and for bio hazard mitigation. $300 million - DOD IT EQUIPMENT –- To procure IT equipment and increase bandwidth Removes restrictions on DOD usage of undefinitized contract actions for COVID- 19 response, consistent with other emergency response scenarios $200 million - TELEHEALTH INITIATIVES - The bill provides $200,000,000 for the Federal Communications Commission to support the efforts of health care providers to address coronavirus by providing telecommunications services, information services, and devices necessary to enable the provision of telehealth services. $100 MILLION - TRANSPORTATION SECURITY ADMINISTRATION (TSA) –for increased cleaning and sanitization at TSA operations at airports and other facilities, overtime and travel costs required to maintain operations while infected employees are quarantined, and additional explosive detection materials that must be disposed of after a single use to prevent the spread of coronavirus. $9.1 MILLION - CYBERSECURITY AND INFRASTRUCTURE AGENCY – to address immediate needs for improved interagency coordination for the protection of critical infrastructure nationwide. $45.4 BILLION - FEDERAL EMERGENCY MANAGEMENT ADMINISTRATION (FEMA) – including $45 billion to continue FEMA’s entire suite of response and recovery activities and reimbursements provided $75 million - NATIONAL ENDOWMENT FOR THE ARTS – for grants, including funding to state arts agencies and other partners in an effort to help local, state, and regional communities provide continued access to cultural organizations and institutions of learning. $75 million - NATIONAL ENDOWMENT FOR THE HUMANITIES – for grants, including funding for state humanities councils and other partners in an effort to help local, state, and regional communities provide continued access to cultural organizations and institutions of learning. $10 billion - Federal Aviation Administration, Airport Improvement Program (AIP) – to maintain operations at our nation’s airports that are facing a record drop in passengers. AIP funds will be distributed by formula.
What’s Next?
Implementation of COVID-19 relief will continue to develop over the coming weeks as federal agencies work to provide additional guidance and put processes in place for implementing COVID-19 provisions while working with relevant state agencies to do the same. Some provisions may be available at a quicker pace than others. o The legislation requires the Small Business Administration to issue additional guidance within 15 days with regard to small business programs outlined above. o While federal legislation provides the basic parameters of programs for small businesses, lenders and the Small Business Administration will likely not be fully capable of delivering on these programs until after the additional guidance is released from the Small Business Administration. o The legislation requires the U.S. Secretary of the Treasury to issue additional guidance within 10 days with regard to lending provisions and direct financial assistance programs to businesses, states, and local governments. o Loans, loan guarantees, and other investment facilities created under the CARES Act will likely not be fully defined or available until after the additional guidance is released from the U.S. Department of the Treasury. o State of Alabama (Alabama Department of Labor) must apply to the U.S. Department of Labor to be eligible to grant additional COVID-19 related unemployment benefits o Municipalities must certify that they meet the criteria for direct, formula-based payments from the U.S. Treasury. This process will be dependent upon guidance provided by the U.S. Secretary of the Treasury. o Certain appropriations require municipalities, states, or other specifically identified entities to apply for funding through the specific federal agencies that oversee funding. In some cases, processes will require agencies to issue additional guidance with regard to the application process. o In the case of business loans and loans available to states and local governments, the U.S. Treasury, Small Business Administration, and other relevant agencies must provide additional guidance to the private financial lending community, which will be a critical part of the processing of, access to, and information regarding business loans made available as a part of COVID-19 relief. o It is widely anticipated that Congress may consider additional legislation in the coming months focusing on the “recovery” effort in contrast to the temporary “emergency” relief most recently enacted. It is anticipated that Congress could focus on improving healthcare delivery, improving mechanisms for national emergency response, and certain labor and economic safeguards that could be more quickly implemented in the case of a national emergency.