The passage of the $2 trillion coronavirus relief bill Friday contains two sections that could bring money back into the Broadway community and to its members.
In the legislation, signed into law by President Donald Trump Friday, $377 billion dollars has been earmarked for small business loans. Those loans, meant to cover payroll and other expenses for businesses of 500 employees or fewer, may be a balm to the many small businesses of Broadway who have been hurting due to the theater closures.
As previously reported, the bill, known as the CARES Act, also contains a provision that gives unemployment benefits to members of the Broadway industry who accepted a job but were not yet able to start work due to the impact of COVID-19.
Under the small business loan program, businesses can receive loans of up to two-and-a-half times their monthly payroll over a specified period of time (with each employee’s payroll capped at $100,000 as part of the calculation). The maximum loan amount is capped at $10 million.
The loan can be used to cover payroll costs and group health benefits or to pay rent for property or equipment, interest on mortgage obligations or utilities owed. The coverage period is from Feb. 15, 2020 through June 30.
These loans can be forgiven, but only if businesses meet certain conditions. The maximum amount that can be forgiven is the total sum of payroll, rent and utilities paid over the course of the eight weeks after receiving the loan.
However, the amount forgiven may be reduced depending on how many employees the company laid off before taking out the loan. And that amount can be reduced further still if businesses cut pay for their existing employees (specifically those who make less than $100,000 a year) by more than 25%.
“The act itself is a really fair and equitable act, and I think it can help Broadway businesses who have been willing to keep their employees on,” said Robert Fried, a partner who works with many small businesses on Broadway at accounting firm Withum, Smith and Brown.
The stipulations around loan forgiveness are meant to incentivize businesses to keep their staff. However, if a business rehires furloughed staff members by June 30, the company may not see any reductions to its loan forgiveness, Fried said.
In addition to the small business provisions, the bill has allotted one-time direct payments of $1,200 to every adult who makes less than $75,000 annually. Children will receive $500.