What the US Stimulus Means for the Endurance Industry

Up to date as of 1:00am ET Thursday 25th March. The Senate has just released an 884 page act, which we have attempted to explain below.

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US jobless claims have spiked in the last week, reaching almost 5 times their 2008 peak (Source: Bloomberg)


News finally broke at 1am ET Thursday 26th March that the Senate had agreed an unprecedented $1.8 trillion economic stimulus package. Though yet to be signed off by the House, we are encouraged by what Senate Majority Leader Mitch McConnell (R., Ky.) describes as a “…wartime level of investment into our nation”

The delay in reaching the agreement since the Republican Senate released their 2nd draft of the proposal on Sunday was due largely to the Democrats’ insistence on stronger protection for small businesses and the unemployed. With $500 billion now set aside in guaranteed loans for these groups, it seems the Democrats’ demands were heeded. During a testing time for all small businesses, it does seem we are close to a resolution.

What is the hold up now?

On Wednesday evening, four Republican Senators hit back at some of the unemployment benefits, citing concerns about a “strong incentive for employees to be laid off instead of going to work”. Though Bernie Sanders had threatened to “put on hold” the agreement as a result, Thursday’s early morning announcement would suggest this question has been resolved with no impact on the additional benefit.

$500 billion Business Bailouts

Even with this holdup, the 884 page act has now been released to the public. In what could be the most consequential news for the endurance industry, the legislation has set aside $500 billion (up from $300bn in draft 1) for businesses affected by Coronavirus. $46 billion of this is reserved for the aviation industry and businesses “critical to national security”, and the Democrats are satisfied that the remaining $454 billion will not amount to a corporate bailout with limited accountability.

Here we look at some of the ways we expect our industry to be affected by this.

Self-Employed

With so many event organizers operating as sole proprietors, the support that the self-employed receive is of great importance to our industry. The good news is the terms of this act have been amended so that the self-employed, alongside gig workers and independent contractors, could benefit from the significant expansion of unemployment insurance (UI).

It’s this section on UI that’s holding up the final agreement. Republicans worry that, as a result of the act, people will be paid more than median national earnings, and thus not be motivated to return to work.

The three most significant provisions are:

1. Section 2104: an increase in traditional UI by $600 per week through July 31 2020;
2. Section 2102, the Pandemic Unemployment Assistance program: the expansion of those aided by UI;
3. Section 2107, the Pandemic Emergency Unemployment Compensation program: an increase of 13 weeks in the time during which people can receive benefits

What does this mean for the self-employed?

Before this act, the median American who had lost their job and was searching for work was eligible for $385 per week for up to 26 weeks. That time period has now been increased to 39 weeks. In addition, successful applicants will now receive an additional $600 per week for the first 4 months.

However, as the self-employed have not technically been laid off or lost all their earnings as a result of Coronavirus, the government has said that they will receive 50% of the average regular UI in their state (approximately $385), in addition to the $600. This means that, for the first four months, the median self-employed UI recipient would get $792.50.

Below shows how this would make your weekly take look, compared to the median usual weekly earnings of full-time workers.

Source: US Bureau of Labor Statistics

Unfortunately, we do not anticipate it being a simple process to apply for your benefits. We will update you as we find out more about this process.

How this affects employers

Initial details suggest that workers furloughed, but not actually laid off, will also be eligible for UI. This could be very significant in an industry where friends or family are often taken on as employees.

Income Support

The government is handing out one-off relief payments of up to $1,200 to US residents in an attempt to stimulate spending in the economy.

How much will I receive?

–   Each qualifying adult will receive $1,200
–   Couples filing jointly will receive $2,400
–   Children receive $500. To be eligible, the child must be 16 years or younger. 

Does my income matter?

Yes. The benefit will start to phase out at a rate of $5 for every additional $100 in income above:

–   $75,000 in adjusted gross income (AGI) for singles. AGI is your total income minus your “above the line deductions”
–   $112,500 for heads of household (typically single parents with children)
–   $150,000 for married couples filing jointly

This income support will completely phase out at $99,000 for singles and $198,000 for childless couples.

The Washington Post have created a handy stimulus check calculator which you can use to see how much you’re eligible for.

Does this apply to the whole nation?

You will have to have filed either a 2019 or 2018 tax return to receive this amount. Tax return deadlines have been extended for this year to July 15th, so if this is your first year filing your tax return, don’t delay or you might not be eligible for the benefit.

How do I receive it?

At a news briefing Wednesday evening, Treasury Secretary Steven Mnuchin said these payments would land directly in people’s deposit accounts. Those without direct deposit will receive checks in the post. Checks will be sent to the last address used on your tax returns. Make sure you head to the IRS ‘Update My Information’ page to make sure this is up to date.

How long will this take?

At the same briefing, Mnuchin said that all monies would be received in the next three weeks.

Small Business Help

From the $500 billion fund, $367 billion in loans and grants have been set aside specifically for businesses with under 500 employees under the SBA’s Economic Injury Disaster Loan (EIDL) scheme. Virtually all event organizers will fall under this category, together with those in hospitality and other ‘non-essential businesses’ who have suffered significant losses as a result of Coronavirus.

Sen. Marco Rubio (R., Fl.), Chairman of the Senate Committee on Small Business and Entrepreneurship, has been most visibly pushing for this aid to sectors like ours, claiming small business would not survive without “extraordinary assistance”.

One of the areas to watch closely is the increase in sources of these loans, with mainstream banks likely to complement the existing SBA. We expect this to speed up the process of receiving your loan, which might otherwise have taken weeks or months.

How much will the loan cover?

The bill will supply amounts equal to two and a half months of payroll, up to a maximum of $10 million per company.

However, note that while loans up to $25,000 do not require any collateral, loans over that amount do – although even for larger loans the collateral requirements are deliberately vague. From the SBA handout:

What are the loan terms?

The stated interest rates are 3.75% for small businesses and 2.75% for private non-profits. The term is up to 30 years, and no payments are required in the first 12 months.

However, as long as the borrower uses the loan to cover payroll, interest on debt, rent or utilities, the loans would be ‘forgivable’ (i.e. they need not be paid back).

How do I apply?

With the Act now passed onto the House, we wait to see what the application process will look like. It does appear that applications will continue to go through the SBA Loans website. All info on their Disaster Loan Assistance can be found here

What next?

We expect the Act to pass through the House with no significant changes.

We will keep the updates coming as things develop. And feel free to reach out to me at [email protected] or on the Race Directors’ Hub, and I will try to answer any questions you might have.

Best of luck once again to everyone through this turbulent and uncertain period.


*Please note that this page may not reflect the changes post CARES Act release, as it is still being finalized at the time of writing.