The gist: Last week, Congress hurried through an unprecedented $2 trillion stimulus to prop up the U.S. economy, unlocking billions in cash to patch the nation’s businesses and workers through weeks more of the social distancing guidelines freezing commerce. Everyone expected dollars would start flowing at the stroke of a pen, but the size and scope of the bill means there’s more to iron out, even as the federal government works to turn on the taps this week.
Yes, the CARES Act is now law, but the rules aren’t really in place yet. The president enacted the stimulus when he signed it last Friday. But, for all of the bill’s provisions, the federal government still has to issue guidance on how the money flows. Some of this stuff is pretty straightforward, and the basic building blocks — who qualifies for what and for how much — are pretty well established. As disaster packages go, this one is expected to kick in pretty fast. The U.S. Treasury announced today that it expects to have the program up and running by April 3.
In the meantime, we’ve been in something of an info vacuum. Many local banks, which will be the vanguard of the billions in cash available to small businesses, have been flooded with calls and are telling customers to gather info while they wait for federal guidance. IberiaBank recently sent out a notice to customers, offering a rundown of what it knows and prepping clients to hit the ground running once the rules are ironed out and the cash is available.
“Information is changing by the minute and although we want to be helpful, we cannot be held responsible for any changes in the information going forward,” IberiaBank wrote to its customers, pointing to the fluidity of the bill’s finer points. In the meantime, IberiaBank suggests businesses gather the following info while queueing up.
- Payroll tax reports for the previous 12 months
- Historical tax returns for three years
- Organizational documents
- A list of all entities owned by any 20% or more owner of the business
Business groups have spun up webinars and one-pager resources. Some went up before the bill was even passed and as Capitol Hill continued to bandy the legislation around. Most of the dust has settled, but some key details are still in motion until the rules are formally promulgated and updated on the Federal Register. Beyond that, the longer term impact of the bill on Acadiana’s economy remains unclear. For instance, we’re not exactly sure how the stimulus will perform in propping up the region’s oil and gas industry besieged on two sides by an international price war and flatlined demand.
“I’d give you $20 to answer that question,” LEDA President and CEO Gregg Gothreaux quipped when asked about that during a taping of the radio program Out to Lunch Louisiana this week. (The episode airs on KRVS Wednesday and Saturday.) Gothreaux commended the bevy of experts and business leaders pounding the pavement to pin down how the stimulus works and what it will do for the local economy.
Around 35% of Acadiana businesses expect they’ll lay people off, Gothreaux said in the interview, relaying some returns from a regional survey of roughly 1,000 businesses. Figuring out which CARES Act provision works best for those businesses is essential to making the bill work, and the federal guidance is the last piece of the puzzle. Once that’s in place, CPAs and attorneys can point employers in the right direction.
“Hang tight” is the best advice at this point. Stephen Waguespack of the Louisiana Association of Business and Industry has urged businesses to wait on the CARES Act’s Payroll Protection Program to activate before making any big decisions; that should happen this week, kicking in billions in forgivable loans for small employers. By government standards, this is moving at warp speed. Businesses are hurting now, but making the wrong decision could be costlier.