How the Historic $2 Trillion CARES Act Impacts the Rental Industry
On Friday, President Donald Trump signed into law the massive $2 Trillion CARES Act, providing economic relief to American workers, small businesses, non-profit organizations, and more. The historic legislation will have sweeping impacts on the event and party rental industry. Rental professionals coping with the financial ramifications of nationwide distancing efforts can benefit directly from the new law.
Officially titled the “Coronavirus Aid, Relief, and Economic Security Act,” The 880 page CARES Act will provide direct financial relief to American adults and families by way of checks being mailed out to households directly. Aid for businesses comes in the form of a slew of small business loans, tax relief measures, and other efforts. The law is designed to curb their losses, help them retain staff, and avoid closures.
What does all of this mean for an event and party rental company? How does this affect consumers? Let’s take a look at the provisions, which the National Retail Federation summarized recently.
Relief for Individuals and Families
The CARES Act will send one-time checks to every American adult who has filed their taxes in 2018 or 2019. These checks will be mailed to the address the IRS has on file. If your address has changed or if you haven’t filed, Senator Chuck Grassley (R-IA) suggests you file now using the IRS’ free filing website.
Individuals will receive $1200, while married couples filing jointly will receive $2400. Families will also receive $500 per child under the age of 17. This money is available to all American adults, regardless of income, including adults with no income. As long as they have a social security number and haven't been claimed as a dependent, they are eligible.
These checks are available to every individual earning $75,000 or less in adjusted gross income, or $150,000 for married couples. Payments are phased out at $99,000 for individuals and $198,000 for married couples without children.
The CARES Act doesn’t stop there in offering assistance to workers and consumers. The law also expands the Federal Pandemic Unemployment Compensation program, increasing unemployment insurance coverage from 26 weeks to 39 weeks. Those getting unemployment checks will get an additional $600 per week, too.
Relief and Aid for Small Businesses
The CARES Act brings with it a plethora of benefits for small businesses, including rental businesses. These include massive expansions to the SBA Disaster Loan program and more.
The CARES Act includes a $350 billion paycheck protection program, providing forgivable loans of up to 250 percent of a small business’ payroll, so long as that company has 500 or fewer employees. The Federal Reserve will also receive $500 billion to expand its support of credit agencies, with more details coming soon.
Related: SBA Disaster Loan: Small Business Relief from Coronavirus
Tax reforms offered in the CARES Act are as diverse as they are impactful. Companies showing losses can now carry back those losses to profitable years up to five years prior with expedited refunds. Half of Federal payroll taxes will now be due in 2021, while the other half will be due in 2022. Business loan interest deductions are also expanded.
An employee retention tax credit will help companies keep their workers, providing a credit against payroll tax liability of 50 percent of qualified wages. This will only be available to companies that have either partially or fully suspended operations due to government orders, and that have seen a 50 percent or greater reduction in gross receipts.
High Praise for CARES Act from ARA, NRF
The passage of the CARES Act has received high marks from a number of companies, organizations, and groups related to the event rental industry, including the American Rental Association and the National Retail Federation.
ARA vice president for government affairs Dr. John McClelland was grateful for his organization’s role in the passage of the historic legislation. “The Vice President’s office gave us an opportunity to provide input to their efforts to address the Coronavirus pandemic. We consulted with the ARA officer team and the ARA government affairs committee to develop our policy position and we are very gratified that Congress established a new grant program that is included in the CARES Act.”
NRF President Matthew Shay underlined the critical importance and timing of the CARES Act’s passage. "Companies that were investing, growing and contributing to a vibrant economy just a few weeks ago have been thrust into survival mode through no fault of their own. They need a bridge to get through this turbulent time and back to the business of job creation and economic prosperity for their workers and the customers they serve.”
Rental industry professionals and business owners hoping to capitalize on the CARES Act should contact the Small Business Administration to learn how they can apply for SBA disaster loans.