Mark Pestronk
Q: Even if my agency gets a second Paycheck Protection Plan (PPP) loan, as provided for in the new law that went into effect in December, it will be inadequate to tide us over until business picks up again. Even if our laid-off employees and idle independent contractors (ICs) get $300 per week in additional unemployment benefits through March 14, also as provided for in the new law, it will not be enough for them to support themselves and their families for long. President Biden has announced a new Covid relief plan called the American Rescue Act. What's in it that would help my agency and its employees and ICs, and will the plan become law?
A: The new American Rescue Act isn't yet a bill that can be studied, but the outline of the plan contains these key points:
• Providing an additional $35 billion or more in low-interest loans and capital for small businesses in addition to the PPP. This amount could be "leveraged" to $175 million in private low-interest loans. Both these amounts seem small in comparison to the existing PPP funding, as the plan's overall emphasis is much more on individuals and families than on business.
• Providing $15 billion in flexible federal grants to "the hardest hit" small businesses such as restaurants, bars and "other businesses that have suffered disproportionately." Again, a drop in the bucket.
• One-time checks for $1,400 to everyone who is now receiving $600 under the new law, again with percentage reductions for higher-income individuals.
• An additional $400 per week in unemployment benefits through Sept. 30. This program would apparently also apply to ICs.
• Expanding the emergency paid sick leave and expanded family and medical leave for Covid to "over" 14 weeks, although the specific amount of both types of leaves that the administration is proposing remains unclear. In 2020, eligible employees could receive two weeks of paid sick leave and 12 weeks of leave, of which 10 were paid. The new plan would repeal the exemption for employers with fewer than 50 employees, but the employers would get equivalent tax credits or rebates.
• Raising the national minimum wage to $15 per hour from the current federal level of $7.25, which is higher in some states.
Unlike the Cares Act and its two follow-up laws, there is nothing special in the law for the travel business. The hope is that vaccinations and expanded testing and treatment will help the industry recover sooner.
Unlike some aspects of the plan, such as a faster vaccine rollout, the money-related measures require congressional approval. The prospects for approval of at least a substantial portion of the plan are good.
The House of Representatives will certainly approve, probably by late February. Although the Senate is now controlled by Democrats, if even one of them votes against the law, it cannot pass, so my guess is that there will be compromises but that some version of the law will pass by late March.