Cliff ‘s Notes for the COVID-19 CARE ACT
by Jeremy Ferranti
If you’re an American and have a job, this impacts you. If you’re a small business owner and have employees, this impacts you. If you rent or own a home, this impacts you. If you’re a real estate investor, this impacts you. If you just lost your job and are left wondering what’s next and what the road ahead looks like, this impacts you. If you think privacy is important and it’s okay for the government to strip it all away, this impacts you. If you thought this 6 trillion dollar bailout was going to lift your 401k and return your life back to normal, you are sorely mistaken.
Here are my cliff notes for the 880 page COVID-19 CARE ACT. That’s 2300 pages of this garbage since last Thursday. 1400+ pages in Pelosi’s Proposed House Bill and now this 880 page Presidential approved one… That’s enough for me!
Small business loans are up to $10,000,000 at a rate of no more than 4%.
FED pays the origination fees to lenders per this schedule:
5% under $350,000
The government is going to allow SBA loan forgiveness. They’re actually incentivizing small business owners to lay individuals off? Here’s why. The government says SBA loan debt may be forgiven and canceled by the government and reduced to the benefit of borrowers by taking the average amount of any small business loan participant workforce in Q1 of 2019 and comparing it to the average total Workforce of Q1 2020. The difference between the two is the amount of borrowed debt that may be reduced to the borrower and paid by the government (think bailout).
Kyle owns a sandwich shop and took out a $1,000,000 SBA Loan. Sandwich shop has 10 employees in Q1/Q2 2019
Kyle lays-off 8 employees due to covid-19 and now can only do pickup sales. Sandwich shop now has 2 employees.
10/2 = 80% loan forgiveness. Kyle may request a 7 (a) SBA loan reduction and consequently now only owes $200,000.
In the event business closes 100%, the loan is Forgiven and outstanding debt is to be written off by lender and principle is paid by the government to the lender.
This is a big deal, given that a number of small businesses fail in the first couple of years. Those on the verge of failing prior to the epidemic, and others looking for an act of god reason to bail out, may now do so without fear of having to pay the debt back. (I would call this is student loan forgiveness for SBA funded failing businesses before COVID-19).
Small businesses, agricultural cooperatives, and non-profits un business for more than 1 year may apply for small loans, which are defined by being loans less than $200,000, on the basis of individual owner’s creditworthiness. Lenders must waive income verification and request for tax returns. Quick Loan Borrowers may request an immediate advance of $10,000, prior to final approval. The advanced will not need to be paid back, the government will pay for the advance. Borrowers will owe the remaining balance to the lenders. The interest rate can be no more than 4%.
Employees may file for unemployment for up to 39 weeks. Unemployment is to be paid through State, or Federal (if the individual is employed by the Federal Government). Standard state unemployment amounts are to be used, an additional $600 called pandemic consideration shall be added to the calculation.
The government is going to send every U.S. taxpayer with a social security # $1200 and an additional $500 for dependents. There will be a tax credit on the 2021 tax return for disbursals. Earners with an adjusted gross income of more than $75,000, $150,000 combined household, will be required to pay taxes on the money.
25% of future corporate profits or individual income may be diverted to a nonprofit and exempted from taxes. There is no cap for the contribution. (Tax shelter for the uber-rich Clinton Foundation types) (P175, L17).
Losses from businesses may be retroactively claimed 5 years back. Business losses beginning in the fiscal year 2020 may carry-forward at a rate of 20% per year until fully exhausted.
Capital gains may be offset by net business write-offs, expenses, and losses. The resultant will be the remaining taxable value and shall be taxed as income. (This is a big deal for diversified investors.)
The bill also calls for transparency in pharmaceutical ingredients and published research on their long-term effects. An interesting piece that’s also included is a required memorandum to be sent out to all individuals prescribed medication with an explanation for govt removal if FDA revocation or warning occurs. (Think Oxycodone and Zantac.)
All COVID-19 health care costs, treatment, and testing for any U.S. citizen shall be free of charge.
If ever in the future an elevated pandemic event should occur in the USA, the president may activate the Inactive Ready Reserve and/or Retired Federal Employees with relevant experience and call for their service. Individuals will receive the current federal pay for the position.
The government will make standard student loan payments to colleges and trade schools on behalf of borrowers to any qualifying student loan debt servicer for 180 days. Payments will go towards principal and interest per the contracted amortization schedule. Debt from the borrowers shall be deferred. (P331-337)
There’s a ton of big Pharma stuff in this bill. Couple things I noticed, ‘Right To Try”, and pharmaceutical company ‘Right to Exclusivity’. Individuals are now allowed to try any experimental Schedule 1, 2, or 3 drugs before FDA approval. 2nd, pharmaceutical companies may apply for the right for exclusive sales of a product and submit annualized blocking petitions for comparable generics. (Think medicine monopoly on this one.)
Not sure what protecting sunscreen manufacturers and calling for a standard deduction for female care products and tampons have to do with COVID-19, but they somehow found their way into this bill. Obviously, Banana Boat had a Ben Franklin handshake in there, the COVID-19 bill now includes ingredient exclusivity rights for sunscreen providers… and save your receipts ladies.
The bill calls for a tiered tax schedule for over-the-counter pharmaceutical sales based on purchasing tiers. The net result of this will be more expensive OTC’s to consumers. Small pharmacies will pay more, big-box pharmacies such as Walmart will pay 50% less. P481, L22 (Good political donor work Walmart) Fee schedule (P489, L17).
The bill authorizes the government to deploy enhanced surveillance on all over-the-counter purchasing and tie it to the individual for purposes of population screening and future government information technology-enhanced surveillance programs. (Search: Syndrome Surveillance.) You can also take a look at this source.
Small businesses and homeowners will be eligible for no income verification loans. Loans may be funded purely based on creditworthiness.
Borrowers may approach lenders requesting forbearance or over the phone loan modifications to renegotiate loans and terms. There shall be no fees, no credit check, and no income verification.
For example, Joe bought a house 15 years ago for 300K ($1750 mo payments), he owes 100k. Joe may call his lender and request a loan modification to reduce the payment to the posted Fed rate and request a revised amortization schedule. I.E. 》 $100,000 @ 30yr, 2.75% = $ 500-month pMt.
0% loans by a waiver from the FED to banks and credit unions. Additionally, the FED will be requiring Community Banks and Credit Unions to Leverage at least 8% of their holdings on consumer loans. (This stimulates buying and investment).
The new bill puts credit protections in place for borrowers unable to make loan or credit card payments until October 1, 2020. So long as the accounts were current on Dec 31, 2019, ALL credit reporting shall be ordered by the FED to be on-time and current. All fees, scheduled payments, interest, and service charges shall be waived as well. Lenders will be reimbursed by the FED to cover debts in the sunset period.
Bill calls for a 120-day moratorium on repossessions, foreclosures, and evictions. Any outstanding debts, missed payments, legal processing and owner costs will be credited back to owners on 2020 tax returns.
Rental property owners may contact lenders and request a forbearance to temporarily suspend mortgage payments for up to 120 days. Notice to renters shall be issued for suspending of rent for the same forbearance period.
Normal State Unemployment shall be paid to individuals and released immediately, without delay. The first unemployment check shall be the amount of the actual wages earned by the individual. The federal government will subsidize the amount of unemployment with up-to an additional $600 per week for individuals who are shorted from normal earnings. $600 FED supplemental unemployment addition has a sunset Clause of October 1st, 2020.
This means if you are filing for unemployment and had a mean weekly wage of $1,200 wk, and unemployment benefits are $400 a week, the federal government will step in and supplement an additional COVID-19 Stimulus of $600 to it, thus $1000 wk until the sunset expires.
There’s a catch, if the lay-off employer sends information to the state to suspend unemployment due to the ability to rehire, the FED unemployment benefit will discontinue. (This is good because it promotes getting people back to work).
The Bill authorizes and allows state and local prisons to order home confinement in lieu of serving time in prison for non-violent detainees.
The Bill suspend the rules of processing United States patents and trademarks for 2 years.
$400,000,000 in Federal sponsored grants to states for 2020 election modifications for COVID-19.
Bill calls for a permanent Pandemic Response Accountability Committee that consists of all branches of government; transportation, information technology, aviation, medicine, life sciences, commerce, biology, and private sector scholars.
Suspension of the implementation of the U.S. REAL ID Act which would have required any individual traveling in the United States to produce a REAL ID on Oct 31, 2020. Individuals who did not have a REAL ID would not be allowed to fly or travel in the USA. Program adoption has been suspended for the 3rd time now until September 31st, 2021. FYI, this bill was passed in 2005 and the Obama Administration delayed the adoption in 2010 for 10 yrs. (P708, L3)
The Bill allows for government expansion and enhanced states of surveillance on all individuals in the USA. Surveillance of travel habits, personal health, medical records, GPS data, purchasing habits, biometric data, call records, social media manuscripts, pictures, sleep habits, vitals, and etc. (The government claims this is a necessary step to help identify and recognize potential pandemic emergence in the future) -Think ‘Minority Report.’ (Read this.)
30 billion towards modernization of US schools, universities, and education systems. The rollout of 5G integration and remote cloud-based information technology for remote learning. FED Education Secretary has been directed to schedule disbursals to public schools on the basis of the surrounding population and classroom headcounts.
Adoption of New 19th Amendment and Global Stock and Currency Manipulation Rules. (P825-830).
5 billion worth of grants made available for infrastructure and housing improvement protections for individuals with AIDS, HIV, and other immunocompromised individuals living in the United States.
4 billion made available for homeless assistance grants.
8 billion budgeted to implement autonomous transportation hub, airport, and pandemic biowarfare travel screening.
Congressional daycare facility workers compensated in full for the shutdown. (Commoners daycare workers get zero).
An Inspector General selected by the President and a new Congressional Oversight Committee will be permanently assigned for management and review of the Care Act Policy.
Lastly, 100 billion to be placed in the US General Fund for anything that isn’t included or specifically thought of in this 6 trillion dollar government kitchen sink.
Jeremy Ferranti is a U.S. Army Special Operations Veteran mentor specializing in Real Estate and Construction Development, Financial Literacy, and Small Business Enterprises.