by Daniel Foran
How the Coronavirus Stimulus Package Will Help
In these times of “confinement,” staying on top of breaking news seems to be no challenge for most of us. With shutdowns and quarantines in full effect, businesses across America are struggling to keep their doors open, with the majority of schools nationwide closed for weeks, if not months. Unemployment numbers are the highest they have been in decades, and retirement plans are feeling the market drop. However, many of us are also familiar with the recent passing of the new and most substantial approved stimulus package in U.S. history – a light in the midst of all this darkness.
Exceeding $2 trillion, the stimulus package was authorized to aid Americans in these troubling times. The majority of Americans will receive a $1,200 check. However, the stimulus package offers aid in many other beneficial ways.
While some have a lot of time of their hands right now, most people don’t want to spend it reading the 900-page bill in its entirety. So, we wanted to highlight some of the specific areas of the Coronavirus Aid, Relief and Economic Security (CARES) Act that will affect you.
If you are a homeowner, a business owner, a freelancer and even those who were recently laid off can benefit in some way.
Protecting our clients as well as our team members during this uncertain time is our number one priority. If you have questions, contact us. Foran Financial Group is here for you.
Under the CARES Act, homeowners across the nation can apply for a mortgage forbearance, or postponement of their mortgage payments for up to 12 months. If you qualify, you will receive a minimum of a 180-day mortgage payment deferral. Various qualifications must be met. A homeowner must be experiencing financial hardships due to the pandemic, it has to be a federally backed mortgage, such as USDA, FHA and VA loans, and the property has to be between a one- and four-unit property – if it is more than five, you may still be able to qualify, but you will have to provide proof of hardship.
If you have a Jumbo mortgage, you may be able to qualify as well. However, your chances of being approved would not be as high as a traditional mortgage. While the delay will not incur any interest payments or penalties to the borrower, the homeowner is still responsible for making these payments as they will more than likely be added to the backend of the loan.
The first step in this process is to call your mortgage servicer to discuss their forbearance process.
Relief for Small Business Owners and Contractors
The Small Business Administration (SBA) Economic Injury Disaster Loan (EIDL) offers disaster assistance of up to $2 million to business owners, freelancers and independent contractors. The goal is to replace short-term lost revenue. This loan will carry interest rates of 3.75 percent for small businesses and 2.75 percent for nonprofits. Most applicants who apply for these loans will receive a forgivable grant of up to $10,000. The most updated, streamlined application process can be directly found here.
Small businesses with less than 500 employees, sole proprietors, independent freelancers and those alike are all encouraged to apply for this loan, and it is said that everyone who applies will be provided a portion, if not all, of the $10,000 forgivable grant immediately, even if they are not approved for a loan.
The SBA Express Loan is also in effect. This is a traditional seven-year loan with low rates and up to $25,000 available. Like many of the loans and programs in the stimulus, the purpose of this loan is to aid small business owners in keeping up with payroll, rent, insurance payments and other needs.
Banks process the SBA Express Loans, so it is best to call your local branch to discuss your options.
Another loan that a lot of people are not aware of is the Paycheck Protection Program (PPP). The PPP offers low-interest rates of 0.5 percent on up to $10 million, which may be considered a grant if you meet certain guidelines. If your loan qualifies as a grant, the full loan amount may also be approved for a pardon, requiring no paybacks.
The sole purpose of the PPP is to assist in paying employees of small businesses and re-hiring those who may have been recently laid off due to the Coronavirus pandemic. Similar to the previous two, these loans are processed and managed through banks, so reach out to your personal banker as soon as possible for more direction for moving forward.
As of March 21, 2020, 3.3 million Americans filed for unemployment. This shattered the previous record set in 1982 of 695,000 filers. By the summer, 14 million Americans may be jobless. The traditional unemployment insurance covered those who worked full-time, W2-covered jobs that were lost due to no fault of their own. The traditional coverage usually lasted 26 weeks and made up for 45 percent of lost wages.
Under the new unemployment insurance included in the stimulus package, part-time employees, freelancers, independent workers and those who currently still have a job but lost hours may be approved. Weekly unemployment pay is increased by an additional $600, and the duration of benefits increased by 13 weeks. How much you receive and for how long will depend on your previous income level.
As of March 20, 2020, the tax filing deadline has been extended until July 15, 2020, adding three months to the normal tax deadline of April 15. Up until this point, no tax payments are required on your 2019 earnings.
As taxes are a unique subject, with everyone having a different situation, it is always best to contact your CPA or tax professional for assistance and best practices moving forward.
Keep This in Mind
With the current allocated budget, loans and grants are being processed on a first-come, first-serve basis. While times are hectic, to say the least, we must do our best in remaining clear and level-headed. As we know, standing still (or doing nothing), even when restricted to small places, is not the best strategy to remaining successful in life. Start making the necessary calls, and reach out to the financial advisors at Foran Financial Group if you’d like to discuss your portfolio.
Try not to panic. Focus on your long-term goals. And don’t let a volatile stock market interrupt you living the good life.
We all need to look for the silver lining in times like these and emerge from the quarantine thriving, not just recovering.
Foran Financial Group has a combined 58 years of experience helping families with their financial plans.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of the advisor, and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Past performance may not be indicative of future results.