Senate Republicans have released their $1 trillion coronavirus relief bill proposal, called the Health, Economic Assistance, Liability Protection and Schools (HEALS) Act. The bill represents the opening bid for “Phase 4” economic relief, the anticipated follow-up legislation to the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act that was enacted on March 27. A resurgence in coronavirus cases across the United States and receding economic activity in many states provided the catalyst for Phase 4 relief bill proposals.
The HEALS Act includes an expansion of the Paycheck Protection Program (PPP), which would aim to preserve cash flow for firms and prevent additional layoffs. The initial PPP allowed companies with fewer than 500 employees to apply for partially forgivable loans to cover operating expenses. The initial PPP program sent more than $500 billion to businesses across the country, including $64.6 billion to the construction industry.
The PPP expansion in the HEALS Act would allocate $190 billion to support second draw loans from the PPP, restricted this time to firms with fewer than 300 employees that have experienced at least a 50% reduction in gross revenues. Qualifying firms would be able to take out a second PPP loan equal to 2.5 times total monthly payroll costs up to $2 million, and these loans would be forgivable if at least 60% of the loan is used to cover payroll costs.
The HEALS Act would also expand forgivable expenses under the PPP to include worker protection costs and covered supplier costs, would simplify the forgiveness process for smaller loans, and would expand PPP eligibility to certain 501(c)(6) organizations—a request from the National Association for Home Builders (NAHB) for a future Phase 4 relief package.
The package also includes a separate and new pot of funding, totaling $100 million, to provide long-term loans to seasonal businesses and businesses located in “low-income census tracts.”
The Senate-proposed HEALS Act also includes an increased employee retention tax credit (ERTC). The current ERTC provides a 50% refundable payroll tax credit on certain wages paid by employers to employees during the pandemic; the HEALS Act includes a 65% refundable payroll tax credit and proposes reducing the gross-receipts threshold to qualify from 50% to 25% compared with the same calendar quarter in the previous year. The HEALS Act proposal also would expand the threshold for ERTC qualification to firms with 500 employees or less. Firms would be able to claim both PPP and the ERTC under the current proposal, but with guardrails to prevent double dipping.
The HEALS Act also would create a new refundable payroll tax credit equal to 50% of an employer’s qualified employee protection expenses, including coronavirus testing, cleaning supplies, and protective personal equipment. The maximum amount of qualified expenses is $1,000 for each of the first 500 employees and would apply to expenses paid after March 12 and before January 1, 2021.
Construction industry group the Associated General Contractors of America (AGC) had a generally positive reaction to the proposed legislation, saying the HEALS Act includes provisions that will help hard-hit construction firms recover.
“Senate Republicans have crafted a relief measure that includes a number of vital provisions that will allow hard-hit construction firms to begin rebuilding their businesses and payrolls,” AGC CEO Stephen Sandherr said in a prepared statement. “Among the most promising of these provisions are liability reforms so construction firms that are protecting workers from the coronavirus will not be subjected to needless litigation. The proposal also includes important improvements to the PPP and a much-needed expansion of the Employee Retention Tax Credit, both of which will help protect construction jobs.”
The individual proposals included in the HEALS Act may not be passed quickly, though, as the legislation is expected to meet resistance from the Democrat-led House. In addition to the PPP expansion and tax credits, the legislation would include another round of $1,200 in direct payments to individuals, a reduction in boosted federal unemployment benefits, liability protection, and more than $100 billion for reopening schools and colleges.
