Key Policy Responses:
With its first confirmed case on January 21st, and first confirmed death about one month later, the United States is now considered a coronavirus hot spot. In response to the pandemic, the US government implemented several social distancing measures – school closures, travel restrictions, and non-essential business closures. It also implemented a number of fiscal policies, including the largest ever aid package in American history. The Coronavirus Aid, Relief and Economy Security Act, commonly referred to as the CARES Act, is estimated to cost 2.3 trillion USD, roughly 11.2% of the nation’s 2018 GDP.
The Act includes a 349 billion USD (1.7% of GDP) forgivable Small Business Administration loan package, known as the Paycheck Protection Program (PPP). Eligible small businesses can borrow up to 2.5 times their average monthly payroll expenses, subject to a 10 million USD cap to cover payroll costs, mortgages, and utilities. One unique feature of the PPP is that loan proceeds used to cover certain expenses can be fully forgiven. Starting on Friday, April 3rd, small businesses were able to apply for the first-come-first-served loan program. Within 13 days, on Thursday, April 16, the SBA announced it had distributed its initial funding. Legislation was signed on April 24 adding an additional 310 billion USD to the PPP loan program. The SBA resumed acceptance of applications on April 27.
Other measures include an expansion of the Economic Injury Disaster Loan, expansion of unemployment insurance benefits, and a one-time stimulus check to American households.