Although parts of the USA are trying to emerge from the nationwide lockdown in a phased manner and starting various economic activities, there’s no denying that an economic downturn is upon us. The Federal Government passed the CARES (Coronavirus Aid, Relief and Economic Security) Act on March 27, 2020 to do its bit to prevent the crisis from breaking the backbone of the US economy.
The Coronavirus Relief package, as defined in this act, is meant to provide businesses with access to the government’s resources in the form of partially/fully forgivable loans, tax refunds, unemployment benefits, retirement funds, recoupment of operating losses, healthcare funds, and more, depending on individual industry needs.
But how is the trucking industry, including the fleets and truckers, set to benefit from the CARES fund?
Scroll on to know.
The impact of COVID-19 on the trucking industry
No one doubts the immense contribution of the trucking industry, as well as the individual truckers, towards maintaining life, healthcare, and mobility during the nationwide lockdown. Truckers left no stone unturned to ensure a constant supply of medical equipment to the healthcare industry, including PPE kits, testing devices, and other COVID-19 necessities.
The social media has been flooding with ‘Thank You Truckers’ notes and messages, which provided a much-needed boost to the men and women who make up this $700 billion industry to carry on with operations.
But long-term solutions and support are needed to address the economic crisis.
According to a report by Business Insider, 88,300 truckers lost their jobs in April 2020, the biggest job loss in the history of the industry. This is driven by the rapid reduction in freight volumes and rates, despite the fleets being the major carriers of essential supplies during the COVID-19 pandemic. As the manufacturing industry was at a standstill for the last few months, incoming freight was stalled, and overall economic activity compromised, the trucking business faced a sharp fall.
Can the CARES Act give hope to the trucking industry?
However, the CARES funds could help improve the situation to a good extent.
Preventing job cuts and beefing up inadequate payrolls are the key focus areas in the act. In that light, the $2 trillion coronavirus relief package can help trucking companies retain their employees and also rehire laid-off staffers. Under the act, companies having 500 or fewer employees can take short-term loans, which can be forgivable, provided the funds are used to pay their employees and regulate other monthly payments like rents, mortgages, insurance, etc. However, if the companies don’t honor the commitment made to the government and start laying-off their full-time workers, they may suffer from increased interest rates, and the loans may not be forgiven. This will be analyzed by calculating the number of employees on the rolls from February 15 to June 30.
For larger corporations, $500 billion has been designated to provide loans, guarantees, and other important investments for running their operations seamlessly. A Treasury Department Inspector General will oversee these investments, and the loans won’t exceed 5 years or be forgiven. Although these funds have been thought to mostly apply to airlines, fleet owners with more than 500 workers could also explore if they can take recourse to the same.
The CARES Act also provides a $350 billion Small Business Relief package for businesses to be able to help workers forced to stay home, owing to medical conditions related to COVID-19. These workers needn’t fear insolvency, as the act will ensure they get their daily wages by providing funds to their employers for up to 8 weeks of payroll. Hence, if truckers get infected by the virus, forcing them to stay home, they won’t be laid off. Paid leaves can also be provided based on certain conditions.
That’s not all. The CARES funds also aim to increase unemployment benefits by providing $250 billion as extended unemployment insurance for the laid-off workers, in our case, truckers. This will be equivalent to about $600 per week for 4 months apart from what the state pays.
What should all truckers know about the CARES funds?
As the CARES funds primarily aim to prevent lay-offs and reduce unemployment, truckers and fleet owners should be aware of a few things as mentioned below to maximize their benefits:
- 75% of the funds should go into paying the full-time workers to receive partial or complete forgiveness on PPP (Paycheck Protection Program) loans. However, it should be noted that insurance premiums won’t be considered under reimbursable payments.
- Independent contractors won’t come under the payroll protection funds of the trucking companies. However, they can always apply as individuals for the SBA (Small business Administration) loans.
- The PPP loans can only be approved for US citizens. However, non-US citizens can apply if they own a US-based company with US-based full-time workers.
- The applicants should complete the loan application forms with great care and fill in every detail to get their loans approved. Further, the companies should apply as soon as possible to cement their places in the queue.
To sum up, the CARES Act has several provisions that could help trucking companies avoid having to announce layoffs. With further measures likely to be in the works, truckers and fleet owners should keep an eye out for the announcements from the Federal and State governments for measures that could help them fight the crisis.