The Coronavirus Aid, Relief, and Economic Security (CARES) Act was just passed and it contains a number of provisions that will benefit the construction industry, including, the Paycheck Protection Program, unemployment, and delayed payroll taxes. Below are a few of the highlights.
Paycheck Protection Program
This is a low interest loan program for small businesses that were operational since February 15, 2020 and had employees to whom it paid wages. Under the loan program, businesses may borrow up to 2.5 times their average monthly payroll to support upcoming payroll, mortgage or rent payments, utilities and interest on debt incurred prior to February 15, 2020. Importantly, the loan may be forgiven if a business can show that the money borrowed was used for payroll, mortgage interest, rent, and utilities. Forgiveness is, however, limited to eight weeks of covered expenses from the original date of the loan.
The Act establishes a temporary Pandemic Unemployment Assistance program through December 31, 2020, to provide payment to those not traditionally eligible for unemployment benefits, including individuals who are self-employed, independent contractors, and those with limited work history, who are unable to work as a direct result of the Coronavirus pandemic.
Delayed Payroll Taxes
Employers will be allowed to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, and the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes and half of Self-Employed tax liability. These deferrals, however, are not available to employers receiving assistance under the Paycheck Protection Program.
The CARES Act should provide help employers throughout the country and the construction industry is no exception. But, let’s hope construction continues to be treated as an essential service to allow for continued operations.