Coronavirus Disaster Relief for Dummies

The title of this post might imply that I’m spoofing on the popular book series. That’s not my intent. The title of this post refers to the amount of deliberate or just unformed false information spewed out in social media about disaster relief right now. A lot of the misinformation appears to be coming from bot social media accounts or trolls (although I can’t explain why they are doing this), just like we see in political campaigning, it also seems that profiteering and real people who just have incorrect beliefs are adding to the problem.

This blog post attempting to clarify might help or hurt the situation. The reason I say this is that I am deliberately oversimplifying the explanation so far that I risk having it presented as too far removed from the truth. TO REPEAT: I AM DELIBERATELY OVERSIMPLIFYING. But some simplification is needed at this point, so here goes anyway:

Disaster relief for the people reading this post falls into three categories: programs for individuals, programs for self employed people and programs for small business owners. This post summarizes the options for each category separately. Remember, this is an overview of benefits post, not an advisory post.


1) Individuals

Stimulus payment – This is a one time advance income tax credit of $1,200 per person and $500 per child that will come to most working class people within the next month. It is usually based on your most recent tax return. Some people who did not file a tax return recently should file a regular or abbreviated filing immediately now. Special administrative instructions will be coming out in the first half of April. Most people do not need to do anything except wait for your payment.

Unemployment Compensation – Unemployment compensation rules will be relaxed. Some people, but not all people, who did not qualify will qualify now. Unemployment compensation is temporarily increased by $600 per week. Unemployment benefits can be extended beyond the usual 26 weeks. This is on a state-by-state basis and the details of the new unemployment compensation program are not available yet. The old traditional unemployment compensation program is unaffected and continues as usual (but now with the expanded benefits).

Consumer protections – a number of are expanded to temporarily prevent you from being evicted, suffering a drop in credit score, having utilities cut off, incurring fines, etc.

State and private assistance – A number of assistance programs are available on a state-by-state or even local community basis.

Each person must evaluate the old existing programs, like standard unemployment compensation, with the new program. Anti double-dipping rules will affect and deter individuals who make inefficient choices.


2) Small businesses

SBA payroll loan/grant – The most often discussed relief is the SBA loan program. The tax credit program lets you borrow up to about 11 weeks of payroll and then forgives the loan for your next 8 weeks of the payroll. The intent is to keep people off unemployment.

Tax-Free disaster relief payments for employees – under these current conditions employers can make tax deductible payments to employees that are not subject to the usual wage taxes for either the employer or the employees. This stretches the available dollars a lot further than usual by avoiding a whole range of federal wage and income taxes.

Economic Injury Disaster Loan – The Small Business Administration offers other types of loans for physical and economic injuries.

State and other loans and grants – a number of other programs are available.

These programs for small businesses typically require more documentation and in some cases will require, or will be aided by, CPA prepared or reviewed financial statements. At a minimum, financial statements, tax filing and payroll accounting needs to be up-to-date. All of this work is expensive so a cost/benefit analysis is wise before applying for a small business assistance program.


3) Self employed people

Self employed people and gig workers could fall into either the “Individuals” category or the “Small businesses” category. There is not a separate category of benefits for self employed people. I just broke out the discussion to explain that there are more relief options available. Each person must evaluate and compare. Anti double-dipping rules are in force that intend to enforce the principle that once a choice is made in one category, the other relief category options are not available.

We expect to find more problems with qualification in this category due to a lack of verifiable evidence and documentation, just as we do in other past disaster relief programs.


What makes these decisions complicated? Many of the program details are not available yet. It is likely that some of the relief problems are not even created yet. It is difficult to make decisions with so much information unavailable. Double-dipping rules apply to prevent people from qualifying for multiple overlapping relief programs. In addition, the traditional skepticism toward those who present as “I’m from the government and I’m here to help” should prevail in all steps now to prevent unintended consequences later. On top of all this, the many short term changes to tax law and procedures will be confusing to all of us.

What should you do? This is an overview post, not an advice post. You should get private individual EXPERT advice from an experienced disaster relief professional. If you rely on advice from friends based on what they read online or another business person, suddenly turned SBA adviser then you should expect misinformation, delays and poor outcomes.

What am I doing? Most of my years working as a CPA focused on small business disaster recovery from super storm Sandy. (I was professionally licensed in the middle of my business career after decades of work in other financial advisory roles). To the extend that my schedule allows, I am offering no fee, no obligation individual discussions to address questions on these tough decisions of what relief programs to consider. While the focus of my work is on small business owner category, I will discuss the options with people in the other categories. Just use to contact information or the scheduling link on this page to reach me.


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