Date : April 13, 2020
Category : In the News
With many of us settling into a “new normal” that is now limited to the four walls of our homes, we have witnessed some important developments in the economy and the markets this week. Below is a summary of what took place.
The week ending Thursday, April 9th, was an entirely different story as the S&P 500 advanced 12.1% to record its best week since 1974.
The upward move in stock prices powered through the drumbeat of another 6.6 million workers filing for unemployment benefits, adding to the more that 10 million who have filed since the coronavirus pandemic began.
Optimism outshined concerns over the economy as the Federal Reserve announced newly created and expanded programs to provide a total of $2.3 trillion in loans to support businesses, cities and states. This week, the central bank also shared more details about its Main Street Lending Program, which is anticipated to supply up to $600 billion in loans to small and medium sized businesses.
In his address on Thursday, Fed Chairman Jerome Powell said that he believes the economy will bounce back once the pandemic subsides and more Americans can go back to work. “There is every reason to believe that the economic rebound, when it comes, can be robust,” he said, citing that we started the pandemic on strong economic footing and that should help the recovery effort.
If you are a current or soon-to-be retiree, there are a few retirement provisions to keep in mind regarding the CARES Act and planning for 2020:
As we’ve shared previously, the CARES Act contains $350 billion in funding for struggling small businesses. Below is a break-down of three of the available funding options:
Designed to help companies maintain their payrolls through June 2020, the PPP allows eligible companies to borrow up to 2.5 times their average monthly payroll costs. The maximum interest rate on these loans is 4% and may be forgiven if certain conditions are met. There is also no personal guarantee or collateral required, and payments are deferred for six to 12 months.
The CARES Act also includes an expansion of the EIDL, which the Small Business Administration has offered for some time. This program provides loans to small businesses and nonprofits in amounts of $2 million, with loan terms that can last up to 30 years. The interest rate is 3.75% for small businesses and 2.75% for nonprofits. An emergency request can be made for a one-time advance of $10,000. This advance is expected to be available within three days of an application being approved and does not have to be repaid.
Businesses and nonprofits that receive a disaster loan can also borrow through the PPP as long as the loans are used for different expenses.
Businesses that were fully or partially shut down, or whose gross receipts declined by more than 50% when compared to the same quarter from 2019, are eligible for a refundable tax credit. The credit is equal to 50% of qualified wages, up to $10,000 with caveats, and is only available for wages paid from March 13 to December 31, 2020.
Here are the documents and information you will need on-hand when applying for these programs and credits:
The COVID-19 pandemic has impacted every sector of business, so if you plan on applying for any of these programs or credits, do so as soon as possible. The $350 billion fund is available on a first come, first served basis and has the potential to be exhausted.
Visit this website to learn more and how to apply, https://www.sba.gov/funding-programs/loans/coronavirus-relief-options.
If you have any questions about our current environment or want to discuss your personal financial situation, please do not hesitate to contact us. We are all available to address questions, concerns, or just to touch base!
Sending along very best wishes for good health and personal safety,
HARRIS FINANCIAL ADVISORS