News
U.S. Congress approved new relief package
H. Roske & Associates LLP, March 23rd, 2020.
The U.S. Congress has agreed on new measures to mitigate the disastrous effects of the pandemic on the U.S. economy. The total volume of the measures is about $900 billion. The legislation, which is a supplement to the federal budget for the coming year, is expected to take effect this week. As with the last stimulus package in March, the CARES Act, a variety of measures are being introduced in an attempt to provide some relief to smaller businesses and workers in particular.
These are the most important measures at a glance:
For the sake of completeness, it should be mentioned that there are also various new measures for laid-off employees, e.g. an extension of unemployment benefits of $300 per week until mid-March 2021.
These are the most important measures at a glance:
- - New funds ($284 billion) for the Paycheck Protection Program (PPP), which was already set up in the CARES Act; companies that already participated in the PPP in the spring/summer can participate again, provided their sales have fallen by at least 25%.
The PPP allows the issuance of "forgivable loans", i.e. loans with the possibility of subsequent cancellation of the repayment obligation. Individual loans can amount to a maximum of $10 million, but generally to 2.5 times the monthly salary costs of the company. To qualify for loan forgiveness, the money must be used for the following purposes, among others:
- at least 60% to maintain salaries
- rent payments
- servicing mortgages
- expenses for independent contractors/freelancers
is expected that the submission of Payroll Journals, EIN, Ultimate Beneficial Owner documentation, and an Authorized Person with Social Security Number will be required to complete the PPP-application. We advise you to contact your American bank, which is administering the program, in order to prepare the appropriate documents. - Tax breaks, e.g. costs paid through a PPP loan will be tax deductible (this has been subject of much dispute between Republicans and Democrats) and a tax break on corporate meal expenses.
- One-time payment of $600 to persons below an income limit of $75,000 per year. Individuals with incomes up to $99,000 per year will receive a smaller amount; those with higher incomes will receive no payment.
- $20 billion for Economic Disaster Loans (like the PPP also administered by the Small Business Administration).
For the sake of completeness, it should be mentioned that there are also various new measures for laid-off employees, e.g. an extension of unemployment benefits of $300 per week until mid-March 2021.