NEED FEEDBACK – the Stimulus Package – Highlights from the CARES Act
Yesterday, the House passed and President Trump signed the CARES (Coronavirus Aid, Relief, and Economic Security) Act into law – see full text here.
On Tuesday, March 31 at 12:00 PM ET, TGA/AAFA will hold a joint webinar on the stimulus bill to provide members with more details and information on how to access the stimulus package.
Register here to join us to learn more about what’s in the stimulus package and how your company can benefit.
The CARES Act provides:
$454 billion for loans, loan guarantees, and investments to eligible businesses. Borrowers:
- Cannot engage in stock buybacks, unless contractually obligated, or pay dividends until the loan is no longer outstanding or one year after the date of the loan;
- Cannot increase senior executive pay (with certain restrictions);
- Until September 30, 2020, maintain its employment levels as of March 24, 2020, to the extent practicable, and retain no less than 90% of its employees as of that date; and
- Must certify that it is a U.S.-domiciled business and its employees are mostly located in the U.S.
In addition, for large businesses (more than 500 employees), the borrower must:
- Retain at least 90% of the recipient’s workforce, with full compensation and benefits, through September 30, 2020 (removes ”to the extent practicable” language);
- Not outsource or offshore jobs for the term of the loan plus an additional two years;
- Not abrogate existing collective bargaining agreements for the term of the loan plus an additional two years; and
Remain neutral in any union organizing effort for the term of the loan.
$349 billion to help small businesses, providing:
- 8 weeks of loan forgiveness for loans used to pay rent, employee payroll, or mortgage;
- 6 months of loan payment eligibility for small businesses (less than 500 employees); and
- Expanded eligibility for access to Economic Injury Disaster Loans (EIDL).
- More flexible bankruptcy rules
- Employee retention credits
- Refundable payroll tax credit for 50% of wages (up to $5,000 per employee)
- The credit is available to employers whose: operations fully or partially suspended due to a COVID-19-related shutdown order; or gross receipts declined more than 50%.
- Delays payment of employer payroll taxes through the end of 2020
- Half to be repaid by end of 2021, half to be repaid by end of 2022
- Relaxes the limitations on a company’s use of net operating losses
- Temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30% limitation to 50% of taxable income (with adjustments) for 2019 and 2020
- Expands unemployment assistance
- Expanded to include self-employed, independent contractors, those with limited work history, and others
- Additional $600 per week for those collecting unemployment insurance
- Immediate payment after application for assistance (no one-week wait period)
- Provides an additional 13 weeks of unemployment benefits through December 31, 2020
- Rebate checks
- $1,200 rebate for ALL non-dependent U.S. residents who earn up to $75,000
- Lesser amounts for residents who earn up to $99,000
- Additional $500 rebate per child
TGA Continues to Push for Relief for Industry
On March 21, TGA joined dozens of organizations in urging President Trump and Congress of the critical need for financial support for the industry during these trying times. The letter followed a March 20 letter from the travel goods, apparel, and footwear industries urging the Trump administration to take quick action to help the industry, including access to capital and credit and tariff relief. Moreover, TGA has convinced U.S. Customs and Border Protection (CBP) to provide temporarily deferral of tariff payments on a case-by-case basis for the industry (Contact TGA’s Nate Herman for more information). TGA continues to work on a longer-term blanket duty deferral that we hope will be announced shortly.
U.S. Government Announces More China Tariff Exclusions for Travel Goods
This week, the U.S. government announced that it has granted new exclusions from the punitive China tariffs for 8 travel goods items (NO luggage) – certain backpacks and duffel bags made of hemp and organic cotton (see description on page 8, #44) (see petition),
certain man-made fiber backpacks (see description on page 8, #45) (see petition), certain fishing tackle bags (see description on page 8, #46) (see petition), certain surfboard covers (see description on page 8, #47) (see petition), certain tote bags with printing (see description on Page 8, #48) (see petition), certain storage bags for powersport vehicles (see description on Page 8, #49) (see petition), certain belt pouches/holsters (see description on page 8, #50) (see petition), and certain gun cases (boots) (see description on page 8, #51) (see petition). Anyone importing products matching these descriptions no longer pay the punitive 25% tariff (until Aug. 7, 2020). Previous tariffs paid are eligible for refunds, retroactive to Sept. 24, 2018. The U.S. government denied thousands of petitions over the last week. In fact, USTR has reviewed all by 3,233 petitions (out of 30,283 petitions submitted) – denying 25,730 petitions to date and only granting 1,017 petitions to date (a 3.4% approval rate). For travel goods, out of 863 petitions filed, USTR has granted only 12 petitions, rejected 679 petitions, with 172 petitions still pending review.
TGA Urges Trump Administration / Congress to Provide Immediate Tariff Relief
TGA urged the Trump administration and Congress to immediately eliminate punitive tariffs on U.S. travel goods imports from China and immediately refund all punitive tariffs paid to date in order to provide an immediate cash infusion for the industry.