What Businesses Can Expect From the Phase 4 Stimulus Package

Congress is set to begin negotiations on the next round of stimulus. For business owners, new measures could bring more tax relief, renewed access to forgivable loans, and more.

With prior stimulus measures set to expire in the next few weeks and the economy continuing to falter as the pandemic resurges across the country, Congress will meet this week and next to hammer out a new relief measure. 

The House already passed its Phase 4 bill, known as the Heroes Act, in May. The $3.5 trillion coronavirus relief bill would provide assistance to state and local governments, extend enhanced unemployment benefits, and offer additional economic impact payments to taxpayers, among other things. The bill has been up for review since the end of May, though Senate Republicans, who prefer a measure with a far lower price tag, have been loath to consider it. They’re expected to introduce their own version of a relief bill this week that will have to be reviewed and negotiated between the two chambers before theyrecess in early August.

Several economic proposals that will affect small and midsize businesses have been building consensus among lawmakers for weeks, so the final version of the Senate bill could contain elements of all of them.

Here are six things you likely can expect from the Phase 4 bill.

1. The PPP will go on, but in a different form.

The Paycheck Protection Program, the $669 billion forgivable loan program aimed at beleaguered small businesses, will continue, predicts Neil Bradley, the U.S. Chamber of Commerce’s executive vice president and chief policy officer. At the very least, he says, there will be a continuation of the program, which was recently extended through August 8.

It’s also possible the PPP will become more targeted. Testifying at a House Small Business Committee hearing Friday, Treasury Secretary Steven Mnuchin expressed interest in “topping off” the approximately $130 billion in remaining funds and extending the program. But he noted that it would need to be focused on certain industries like hotels and restaurants that can demonstrate actual losses, resulting from the pandemic. “This time we need to do a revenue test,” he said. 

A proposal that has been gaining ground with lawmakers, dubbed the Prioritized Paycheck Protection Program Act, or P4, offers to extend the PPP and open it up to companies that already received PPP loans (excepting for publicly traded companies), as long as they can show financial losses as a result of the pandemic.

There’s been widening support for streamlining the PPP forgiveness process, too. While certain loans are now eligible for the EZ loan forgiveness application, there’s greater interest in easing things further for smaller businesses by automatically forgiving all PPP loans under $150,000 or $250,000. On that note, Mnuchin at Friday’s Small Business Committee meeting confirmed interest in blanket forgiveness. “Yes, that’s something we should consider,” he told lawmakers.

2. Local communities will get a boost.

The next iteration of relief funding likely also will focus on companies in low-income and rural areas, as well as minority-owned businesses, which experienced difficulty accessing the PPP. Bradley notes that the Recharge and Empower Local Innovation and Entrepreneurs Fund (RELIEF) for Main Street Actwould earmark $50 billion for cities, counties, and states to support small business local relief funds. One of the key flaws of the PPP is that it failed to reach the smallest businesses and minority-owned companies that often did not have traditional banking relationships prior to the pandemic. As this program would be run through local institutions–and not banks–the effort is seen as potentially better suited to reach these businesses. While the U.S. Treasury would operate the program, as written in the bipartisan bill introduced in the Senate in mid-May, banks would not be involved.

Funding for block grants, operated by states and local governments, could also get replenished. The Cares Act initially provided $150 billion in federal aid to state and local governments across the country, some of which went toward grant funding for local business. 

3. More tax relief is on the way.

Currently, PPP funds don’t count as taxable income, but an Internal Revenue Service ruling prevented businesses from being able to deduct traditional business expenses paid for by those funds if forgiven. That may change soon. A bill that would allow the deduction with some guardrails, called the Small Business Expense Protection Act, was introduced in the Senate in early May.

The Phase 4 bill also is expected to bolster and expand access the Employee Retention Tax Credit (ERTC), says Bradley. Currently, companies that have tapped the PPP can’t access the ERTC, which was enacted as part of the Cares Act to incentivize businesses hurt by the Covid-19 pandemic to retain employees. As part of a proposal, dubbed the Jumpstarting Our Businesses’ Success Credit (or JOBS Credit) Act, which was introduced in May, the refundable tax credit–now equal to 50 percent of up to $10,000 in qualified quarterly wages–would increase to 80 percent of up to $15,000 in wages each quarter for up to three quarters. Bradley adds that there’s also potential for the ERTC to expand eligible expenses to include a limited amount of fixed costs.

4. Stimulus checks will be back but they may be less generous.

The Heroes Act passed by the House supports another round of stimulus checks that the Cares Act authorized in March for millions of taxpayers: individuals earning under $75,000 would get $1,200, while married couples with less than $150,000 in adjusted gross income would get $2,400. The bill also would provide an additional $1,200 for up to three dependents, regardless of age. 

Senate Republicans are likely to take a more conservative approach to the payments. Last week, White House economic adviser Larry Kudlow said the next round of stimulus checks may be less than $1,200, while Senate Majority Leader Mitch McConnell (R-KY) in early July stated the next round of stimulus checks may be limited to those with incomes of around $40,000.

5. Enhanced unemployment benefits will continue, but get a haircut.

The Cares Act’s enhanced unemployment insurance, which offered an additional $600 per week on top of existing state benefits, is set to expire at the end of July. Many employers found the measure complicated the task of rehiring employees, who were suddenly earning more on unemployment than at their former jobs.

To avoid that issue–but also ensure laid off or furloughed workers have support–Bradley says that lawmakers are considering more targeted subsidies that would vary the amount offered on a federal level to better coordinate with what’s available at the state level. So between the variable federal supplement and those provided by each respective state, unemployment benefits would replace 80 to 90 percent of a worker’s former wages, up to a maximum federal benefit of an additional $400 per week.

The enhanced benefits also may come with a hiring bonus. The Paycheck Recovery Act, proposed in mid-May, offers low-wage workers–those earning less than $40,100 annually–a $1,500 rehiring bonus upon returning to work.

6. Businesses will receive greater liability protections.

Senate Majority Leader Mitch McConnell has made no secret of his desire to see greater liability protections for employers. The details of his approach are still unclear, though Bradley says it’s likely that the Phase 4 bill will allow for some form of safe harbor for companies that make good-faith efforts to follow public-health guidelines.

This article was written by Diana Ransom for Inc.com

INVEST IN YOU: READY. SET. GROW. Looking for a job? Coronavirus-related layoffs expanding roles for freelancers in these hot sectors

Maskot | Getty Images

Thursday’s report from the Labor Department that 1.5 million people filed new state unemployment claims last week serves as a stark reminder that the impact from the Covid-19 economic fallout is very much persisting.

For those seeking work amid the coronavirus pandemic, there is a bright spot: According to the annual “Future of the Workforce Report” from Upwork, opportunities abound right now for the independent professional. With the unemployment rate at 13.5% and a rapidly changing labor market, hiring managers are accelerating the use of freelancers, says the global freelance job platform.

The survey finds that 45% of hiring managers expect freezes on new staff, while 39% expect layoffs to continue in the coming months. At the same time, close to three-quarters (73%) of hiring managers are looking to maintain or expand their hiring of independent professionals, with a typical employment length of about four months. Nearly half of all hiring managers surveyed said that they are now more likely to use these freelancers as a result of Covid-19.

Upwork’s annual report surveyed 1,500 hiring managers, once in November of 2019 and again in April of 2020, after the coronavirus outbreak. 

“This remote work experiment will also have long-term implications for the traditional ways of hiring,” Upwork’s chief economist Adam Ozimek told CNBC in an email. “As companies embrace more remote work, they will also see that this opens up opportunities for how they think about hiring, recruiting and their workforce as a whole. They will no longer be confined to just their local labor markets but can find the most skilled talent, regardless of their location, that best meets their business needs.” 

Flexible work: Not just a short-term solution

The most popular fields for short-term project work are writing, creative, web and software development positions, according to the Upwork survey. Hiring managers cited projects focused on motion graphic design, front-end data development, internet marketing and web analytics.

“For many the reliance on independent talent and a more flexible workforce is not just a short-term solution but a long-term strategy that will enable businesses to stay competitive and agile as they accelerate into the future,” Ozimek said. 

Employers are also on the lookout for candidates with transferable soft skills and more foundational skills, such as customer service and problem solving

The growth rate of full-time remote work is expected to more than double from 30% to 65% within the next five years.

With the coronavirus pandemic making in-person hiring impossible in many cases, recruiters and hiring professionals are adopting virtual platforms to conduct interviews and speak with candidates.  

WATCH NOWVIDEO08:25Searching for a job? The answer might not be online

The transition to a remote working environment for most white-collar and corporate employees has several benefits, including no commute, less time spent on nonessential meetings, and limited distractions that are typically commonplace while working in the office. Working remotely has provided employees with increased flexibility, and 59% of hiring managers expect that companies who do not adapt to these more flexible conditions are at risk of becoming less competitive. 

“Covid-19 has thrown many companies and workers into the deep end when it comes to trying remote work. But what most are finding is that remote work really does work. … Lack of commute, reduction of nonessential meetings, greater autonomy and, most importantly, increased productivity. … These benefits will be hard to give up,” Ozimek said.

This article was written by Nicole Dienst for CNBC.com

The Stock Market Doesn’t Care About Political Gridlock

a cartoon depiction of the GOP party and democratic party facing off in a boxing match

With partisan politics taking over Washington DC and political gridlock at an all time high, many market pundits wonder what effect all this will have on the financial markets. In my humble opinion, the stock market couldn’t care less at this point. Political gridlock is nothing new to the nations capital. In fact, politicians actually getting something done is way more rare that partisan bickering. My position is simple, the markets are used to nothing getting done and will continue to march forward as the single greatest wealth generator in the world. Political bickering likely means no significant changes will come about, which spells a continuation of easy money policies are low interest rates…..all of which the stock market loves. Don’t get me wrong, the market is pricing in a favorable chance of tax cuts….so things could get choppy if those dreams are dashed…..but after a brief sell off the market would get itself back on track……like it always does.

Moral of the story……turn off the news, the fear they are driving about politics is costing you money.

-MD