House Democrats on Monday evening unveiled a $2.2 trillion COVID-19 relief package that reauthorizes the small business lending program, provides another round of $1,200 stimulus checks to spur consumer spending, and brings back the $600 federal boost to unemployment benefits. The bill includes other measures to help stimulate the economy.
The legislation addresses needs that have arisen as the coronavirus pandemic continues. The package calls for improvements to the Paycheck Protection Program (PPP) to aid struggling small businesses and non-profits. If passed, it will authorize a second round of PPP loans and additional aid for the struggling restaurant industry. The bill also seeks to protect payrolls by enhancing the new employee retention tax credit that encourages companies to keep workers employed.
The stimulus package will also provide a second round of economic impact payments of $1,200 per taxpayer and $500 per dependent to help spur economic activity that can help small businesses.
The spending package proposes $436 billion for one year’s worth of assistance to state and local governments that need help to pay first responders and healthcare workers. The bill would also approve funding to keep airline industry workers paid.
The Democrats seek to restore weekly $600 federal unemployment payments to unemployed workers – including members of the gig economy – through January. Additionally, the bill protects people who have lost their employer-provided health insurance by making sure those who have been laid off will receive the maximum ACA (Obamacare) subsidy on the exchanges.
An additional $225 billion in funding is allocated for education – including $182 billion for K-12 schools and nearly $39 billion for postsecondary education – and $57 billion to support childcare. The bill also provides $75 billion for coronavirus testing, contact tracing, and isolation measures, with an emphasis on addressing disparities facing communities of color. Also included is $28 billion for procurement, distribution, and education campaigns for a safe and effective vaccine.
The bill also provides housing assistance to renters and homeowners, as well as additional funding for nutrition programs. The package allows for spending to ensure safe elections, assure an accurate Census, and preserve the U.S. Postal Service.
Democrats say this $2.2 trillion Heroes Act provides resources to protect lives and livelihoods and assert that they are making good on their promise to compromise with this updated bill. They believe this updated “Heroes Act” is necessary to address the immediate health and economic crisis facing America right now.
While authorization of more PPP funding is a positive step, Congress still needs to simplify the loan forgiveness process from the initial round. Borrowers are going to take a wait-and-see approach until they know that their initial PPP loans will be forgiven. Even at interest rates as low as 1%, the majority of small businesses – especially the ones that are fighting for survival – will be hard pressed to repay loans that they expected to be forgiven. They certainly will not be in a position to borrow more.
Now is the time to set this straight. The SBA and the Treasury must get the forgiveness process moving. Only after that has occurred will small businesses be able to take advantage of the next installment of PPP funding.