The federal government finally flexed its huge financial muscle, throwing a $2.2 trillion stimulus punch at the coronavirus in hopes it will ease some of the pain American consumers are – or will be – suffering in the fight against COVID-19.
The stimulus bill, which was signed into law by President Trump March 27, provides debt-relief options for all levels of the U.S. economy from individual consumers to small businesses to large corporations.
The train carrying consumers who need debt help is coming fast. A record-breaking 3.28 million people filed unemployment claims last week. That is a stunning 2.58 million more than the previous one-week record of 695,000 set in October of 1982.
Some of the highlights of the $2.2 trillion bill that hopes to soften the blow to the U.S economy include:
- $1,200 checks to each individual making $75,000 or less and a sliding scale (downwards) for people making between $75,000 and $99,000. No one making more than that will get a check.
- Unemployment benefits would be expanded from 26 weeks to 39 weeks and freelancers and gig workers would qualify for the first time.
- Small businesses (those with under 500 employees) would have a crack at $400 billion in zero-percent interest loans. The loans could be forgiven if the company follows certain conditions.
- Large companies deemed “severely distressed” will receive large grants or loans. The airline industry, for example, will get $25 billion in grants and another $25 billion in loans.
- Overwhelmed hospitals will have access to a $100 billion fund to purchase protective gear for health-care workers, testing supplies and support emergency operation centers.
- Some federal agencies like FEMA (disaster relief) and SNAP (formerly food stamp program) will get additional funds to assist those impacted hardest by COVID-19.
The record-setting stimulus package allows the federal government to finally take its place alongside private business, who started offering debt-relief programs nearly two week ago to ease the economic pain.
Many of the major banks and credit card companies are offering small, but welcome debt-relief choices for consumers hit hardest by COVID-19. Thasunda Brown Duckett, the CEO of Chase Consumer Banking, summed up the situation best for all levels of the economic spectrum when she wrote on the company’s website:
“Like you, I’m finding it hard to take in all the news about COVID-19. I know many of you are looking for help to manage through this. That’s why we’re doing all we can to make sure our branches are open, our bankers and advisors are there and our call centers are staffed. If you’re affected by COVID-19 and need help with your accounts or making payments, please reach out to us.”
Government is now trying to catch up to Chase and other financial companies to assist people in need.
Government Stimulus Package for COVID-19 Relief
The federal government tried to answer the “Help Wanted!” cries of consumers, but as often happens when politicians go to work on something, there was much wrangling to go through to get something done. In the meantime, some departments in the Trump administration took their own action.
Here is a rundown of the most impactful debt-relief options in the stimulus bill.
$1,200 Coronavirus, COVID-19 Relief Checks
Every individual making $75,000 or less will receive a check from the U.S. Treasury for $1,200. A couple that makes under $150,000 and files taxes jointly would each receive $1,200 for a total of $2,400.
Married couples will get an additional $500 per child.
Reduced checks will go to people making between $75,000 and $99,000 a year ($198,000 jointly).
Eligibility will be based on 2019 or 2018 tax returns. The government will check your tax return for those years and, if you qualify, you will receive a check, which will arrive sometime in April in the form of direct deposits or checks.
A second check – sometime in the summer – has been discussed, but was not part of the bill.
The average payout for unemployment is $300 a week and last 26 weeks. That timetable has been expanded to 39 weeks and freelancers and gig workers would qualify for the first time.
From a coronavirus standpoint, people unable to work because they are sick, quarantined or need to care for children because of COVID-19, will receive an “added benefits” check for $600 per week. The “added benefits” would last four months.
Small Businesses Get Grants/Loans
Businesses with less than 500 employees can receive help from $400 billion in zero-percent interest loans.
These small business loans could be forgiven if the company follows certain conditions like not firing its workers; using the money to cover employee salaries; pay health insurance premiums; utilities and rent.
The maximum loan would be for $10 million.
Big Business Gets Some Breaks
Companies with more than 500 employees and deemed “severely distressed” will receive large grants or loans.
The passenger airline industry, for example, will get $25 billion in grants (money they won’t pay back) and another $25 billion in loans they are expected to pay back.
There is $17 billion in loans to companies considered critical to national security and $425 billion for other businesses, states and cities.
Hospitals and Health Care Centers Get Help
The stimulus bill set aside $100 billion to help hospitals that were hit hardest by the pandemic. The money is intended to allow them to purchase protective gear for health-care workers, testing supplies and support emergency operation centers.
Community health centers and public health agencies like the Center for Disease Control and Prevention also will receive funding to help them get better prepared for the next crisis.
Some of the agencies expected to play a big part in the recovery from coronavirus received much-needed help from the stimulus package.
The food stamp program, now called SNAP, will get $25 billion to help the hungry; local schools and colleges will receive $31 billion; the Federal Emergency Management Agency will get $45 billion; and local transit systems will receive $25 billion.
Help from Government Agencies
Several agencies in the Trump Administration didn’t wait on Congress to pass a stimulus bill. They took action on their own. Here are some of moves you might find useful.
Paid Sick Leave
Congress actually passed a bill called the Families First Coronavirus Response Act to help workers in smaller businesses deal with using sick leave to care for their families.
The target audience for the new law is companies with less than 500 employees. Those companies will receive a tax credit on next year’s tax bill for offset the cost of providing it to their employees.
The intention of the new law is to give two weeks of paid sick leave at 100% of your normal salary – up to $511 per day – for a total of $5,110. That is just the first of many qualifiers for this program so check with your company’s Human Resources Department before making plans.
- You can get two weeks of paid family and medical leave at two-thirds your regular pay rate to care for an individual subject to quarantine.
- You could get an additional 10 weeks paid family and medical leave at two-thirds pay, up to $200 a day (and $10,000 aggregate), if you’re a parent caring for children whose school has closed.
- Employees must have worked at least 30 days to be eligible.
- Businesses with less than 50 employees may be exempt from providing leave due to school closing or childcare unavailability if that jeopardizes the viability of the business.
- Businesses with more than 500 employees are exempt from the law.
- Nursing homes, hospitals and health care providers also are exempt.
Tax Break … Sort of
The Treasury Department announced that if you still owe income taxes for 2019, you get an extra three months to file. The filing date was moved from April 15 to July 15, allowing people more time to focus on dealing with the financial fallout of COVID-19 rather than paying the government taxes.
If you expect a refund, you can file anytime.
Student Loan Interest Suspended
President Trump announced on March 21 that student loan borrowers would be given the option to suspend payments for at least two months without penalty. This came a week after the Department of Education said borrowers would pay no interest on student loans indefinitely.
To suspend payments, borrowers should contact their service providers and enroll in the forbearance program. No interest will accrue on the loan during forbearance.
Federal Reserve Cuts Interest Rate to 0%
The Federal Reserve did its part to slow the economic downturn by reducing interest rates to 0%, but the move hasn’t helped its intended targets: a stable stock market and lower borrowing rates for consumers and small businesses.
The Dow Jones Industrial Average, which peaked at 29,568 on Feb. 12, 2020, went as low as 18,213 on March 23, a drop in value of 38%.
Small Business Administration Provides Access to Loans
The coronavirus could be lethal for small businesses, considered the economic lifeline in most communities, but the Small Business Administration is trying to prevent that.
The SBA is offering low-interest working capital loans of up to $2 million for small business and nonprofit agencies affected by COVID-19. Small businesses would pay 3.75% interest on the loans and nonprofits would pay 2.75% for terms of up to 30 years.
Many states and cities are offering low-interest loans for small businesses. More information is available on the SBA website.
Private Businesses Offering Relief from COVID-19
Private businesses, specifically banks and credit card companies, jumped in first in offering debt-relief options for consumers reeling from the economic fallout of the coronavirus.
The most often-repeated message from the big banks and credit card companies is for those negatively impacted by COVID-19 to stay home and use online or mobile app banking services to do their bill-paying and keep track of their accounts.
The second most-common message was: Call our customer service department for specific help with either personal or small business accounts. The sooner you contact a bank representative, the better.
Each company shared steps to improve the cleanliness in the working area within the banks, including daily cleaning with stronger disinfectant product on high-touch surfaces and offering hand sanitizer at every branch. The push for cleaner surfaces extends to ATMs and the keyboard at ATM locations.
With that in mind, here are some of the relief services you might take advantage of at specific banks and card companies.
Chase Bank COVID-19 Recommendations
Chase strongly suggests customers go online or use mobile apps for:
- Access to accounts
- Make bill payments
- Deposit checks
- Transfer funds between accounts
Chase warned customers to be wary of scammers trying to take advantage of the situation and said it would never ask for personal information from a customer like name, address, pin number or password.
It also said it would help customers understand their options with travel changes and cancellations and work with small businesses to manage potential disruptions during the spread of the virus.
Chase also offers a chance to talk with J. P. Morgan financial advisors about market volatility.
Capital One COVID-19 Recommendations
Capital One is offering many of the same suggestions, but added a “Frequently Asked Questions” page that deals with concerns that come up early in the virus crisis, most of them dealing with cancelled travel plans.
If you want to contact Capital One about its personal credit card products, there is a page with phone numbers and mailing contact for virtually every problem.
There also is a page with numbers to ask about small business credit card issues.
Citi Bank COVID-19 Relief
CitiBank instituted a 30-day program that started March 9 for its retail customers to waive monthly service fees and penalties for early CD withdrawals. Citi’s small business customers also get monthly service fees and remote deposit capture fees waived as well as waived penalties for early CD withdrawal.
Eligible customer can use Citi’s “always on” assistance programs for credit line increases and forbearance options.
Citi directs customers to take advantage of its online and mobile apps to access accounts and do regular banking business. The company says it has made a number of enhancements to those services that make it easier to manage your account digitally.
U.S. Bank COVID-19 Relief
U.S. Bank is offering two loans for personal accounts that may provide short-term solutions.
- Simple Loan: Customers can borrow from $100 to $1,000 at $6 interest per $100 borrowed. Loan is repaid in three equal monthly payments.
- Personal Loan: You can borrow $1,000 to $4,999 for up to 48 months at 2.99% APR.
U.S. Bank also is offering two loans for customers with small business accounts.
- Quick Loan for general business purposes: You can borrow $5,000 to $250,000 with terms from 12 to 84 months at an interest rate 2% lower than the standard rate for which the business would qualify.
- Cash Flow Manager (secured and unsecured): An on-demand line of credit of $10,000 to $250,000 at an interest rate 1% lower than the standard rate for which the business would qualify.
The loans are available until March 31, 2020 and will be re-evaluated at that time.
Wells Fargo COVID-19 Relief
Wells Fargo posted a news release March 8th about donating up to $6.25 million to aid in a coronavirus response.
The only mention of relief for customers was a suggestion to call and “speak with a trained specialist to discuss options available for consumer lending, small business and deposit products.”
The Federal Trade Commission has posted a warning that scammers are looking at panic-stricken consumers as easy prey for opportunities to take money or steal personal information.
Scammers could be using fake social media posts, texts or email posts that sound like news on treatments or information on where to make donations for relief funds and it’s all fake.
Here are the FTC’s warnings about scammers:
- Don’t click on links from sources you don’t recognize
- Ignore emails claiming to come from the Center for Disease Control
- Avoid online offers for vaccinations or treatments
- If someone is asking for donations in cash, gift cards or wiring money, stay away!
- Beware of “investment opportunities” in any company claiming that says it can detect, prevent or cure coronavirus.