Everything You Wanted to Know About the 4th Stimulus Package

Congress is all set to start negotiations on the next round of stimulus packages that will have a massive impact on American businesses. It will be a welcome relief for business owners as new measures will bring tax relief, renewed access to forgivable loans, and more. The previous stimulus measures are all set to expire in the coming weeks, and the economy continues to falter. Congress is expected to meet soon and hammer out the details for a new relief measure.

The House has already passed its Phase 4 bill, known as the Heroes Act, in May. That $3.5 trillion coronavirus relief bill will provide assistance to state and local governments, extend enhanced unemployment benefits, and provide additional economic impact payments to taxpayers, among other things. The bill has been up for review since the end of May, even though Senate Republicans are not planning to consider it. They want a measure with a lower price tag. There is an expectation that they will introduce their own version, which will be reviewed and negotiated between the two chambers.

Several economic proposals affecting small and midsize businesses have been building consensus among lawmakers for weeks, so the Senate bill’s final version could contain elements about all of them. Here are some of the main elements that you can likely expect from the 4th Stimulus Package.

1.    The PPP Will Go On, but Will Be in a Different Form

It is predicted that the Paycheck Protection Program, the $669 billion forgivable loan program aimed at helping out beleaguered businesses, will continue. There will be a continuation of the program as the problems faced by these businesses haven’t diminished in any way, shape, or form. There is also the possibility that the PPP will become more targeted. Treasury Secretary Steve Mnuchin has already expressed interest in ‘topping off’ the approximately $130 billion in the remaining funds and is looking to extend the program.

However, he has noted that there would be a need to focus on different industries such as hotels and restaurants that can demonstrate actual losses caused by the pandemic. He claimed that this time there would be a revenue test conducted first. This proposal is already gaining ground with lawmakers and has been dubbed the Prioritized Paycheck Program Act or P4. It offers to extend the PPP and open it up to companies that have already received PPP loans if they can manage to show financial losses caused by the pandemic.

There has already been a lot of support gathering for streamlining the PPP forgiveness process as well. Even though certain loans are now eligible for the EZ loan forgiveness application, there has been greater interest in easing things further for smaller businesses by automatically forgiving all the PPP loans under $150,000 or $250,000. Steve Mnuchin also expressed interest in blanket forgiveness and claimed that it is something that we will consider.

2.    Local Communities Will Get a Boost

The next iteration of relief funding will likely focus on companies in low-income and rural areas and minority-owned businesses, which experienced difficulties accessing the PPP. The Recharge and Empower Local Innovation and Entrepreneurs Fund (RELIEF) for Main Street Act will earmark $50 billion for cities, counties, and states to support small business local relief funds.

PPP’s one major flaw is that it has failed to reach the smallest businesses and minority-owned companies that often didn’t have traditional banking relationships before the pandemic. As this program will be run through local institutions and not banks, the effort is seen as potentially better suited to reach these businesses. Even though the U.S. Treasury will be operating the program, the banks will be the ones that will be involved.

Funding for block grants operated by local governments and states could also get replenished. Initially, the Cares Act provided $150 billion in federal aid to state and local governments across the country. Most of that went to grants for local businesses.

3.    There Will Be More Tax Relief for Everyone

At this moment in time, the PPP funds don’t count as taxable income. However, an Internal Revenue Service ruling has prevented businesses from deducting traditional business expenses paid for by those funds if forgiven. That will change soon. A bill that will allow the deduction with some guardrails, known as the Small Business Expense Protection Act, was introduced in May in the Senate.

The Phase 4 bill is also expected to bolster and expand access to the Employee Retention Tax Credit (ERTC). Currently, companies that have tapped the PPP can’t access the ERTC, which was enacted as part of the Cares Act to give incentives to businesses that were hurt by the COVID-19 pandemic to try and retain their employees.

The Jumpstarting Our Businesses’ Success Credit (JOBS Credit) Act was introduced in May. This piece of legislation would increase the ERTC from 50% to 80%, bringing qualified quarterly wages of up to $10,000 to $15,000 for almost three quarters. There is also the potential for the ERTC to expand eligible expenses to include a limited amount of fixed costs.

4.    Stimulus Checks Will Be Back, but They May Be Less Generous

The Heroes Act, which the House passed, supports another round of stimulus checks. It stated that individuals who were earning under $75,000 would get $1,200, while married couples with less than $150,000 in adjusted gross income would get $2,400. The bill would also provide an additional $1,200 for up to three dependents, regardless of age.

Senate Republicans are more likely to take a conservative approach towards the payments. It was announced that the next round of stimulus checks would be less than $1,200. There is also the possibility that the next round of stimulus checks may only be limited to Americans earning around $40,000 annually.

5.    Enhanced Unemployment Benefits Will Continue

The Cares Act’s enhanced unemployment insurance, which provides an additional $600 per week on top of existing state benefits, expired at the end of July. Most employers found that the measure complicated the task of rehiring employees, who had suddenly started to earn more on unemployment than they were earning at their former jobs.

To avoid a repeat of that issue and ensure laid off or furloughed workers have support, lawmakers are considering offering more targeted subsidies that would vary the amount offered on a federal level to better coordinate with what’s available at the state level. So, between the variable federal supplement and those provided by each respective state, unemployment benefits would replace 80% to 90% of a former worker’s wages, up to a maximum federal benefit of an additional $400 per week.

The enhanced benefits may also come with a hiring bonus. The Paycheck Recovery Act, which was proposed in mid-May, offers low-wage workers, who earn less than $40,100 annually, a $1,500 rehiring bonus upon returning to work.

6.    Businesses Will Receive Greater Liability Protections

Mitch McConnell, the Senate Majority Leader, has expressed his desire to see greater liability protections for employers. His approach’s details are still a bit unclear, even though it is likely that the Phase 4 bill will allow for some form of the safe harbor for companies that make good-faith efforts to follow public-health guidelines.

Stimulus Aid Needed for A Stumbling Economy

With the November election just around the corner, both House Republicans and Democrats are fighting to improve their re-election chances. That has seen them go back to the drawing board to hash-out the finer details of a stimulus package in the best interests of businesses and the economy. The COVID-19 pandemic has had an unprecedented level of impact on the economy. It is expected that the upcoming stimulus package will help the American public get back on their feet.

There is currently a debate surrounding the amount of relief that should be injected into the economy. There is a lot of back and forth between Democrats and Republicans, and most experts think that the sooner both parties can agree on a figure, the better it will be for everyone.


The 4th Stimulus Package can’t come soon enough. Unemployment is still at record highs. Millions of people are looking to the government for support in these uncertain times.  Fortunately, it looks like help is on the way.

There appears to be a framework in place, but the finer details still need to be worked on by Congress. The Senate and the House are working towards approving a new pandemic bill with stimulus checks and enhanced unemployment benefits. This bill could be a game-changer for the economy, as it will inject some much-needed cash into the system. All we can do now is hope relief comes sooner rather than later.