ECONOMIC COMMENTARY

Congress passes second economic relief package

Additional funding provided to small business loan programs, hospitals, and COVID-19 testing

A part of the Washington Policy series

Congress passed a second economic relief package called the Paycheck Protection Program and Health Care Enhancement Act (Act) totaling over $480 billion. The Act builds on the CARES Act relief package passed by Congress on March 27, 2020. Congress significantly underestimated the medical and human costs associated with battling COVID-19 and the depth of the economic harm on unemployed workers, and businesses across America, requiring another round of small business funding. Counting the new law, over $730 billion has been earmarked for small business loan programs. Small business trade groups are telling Congress this is still not enough money to meet demand. An in-depth perspective on the CARES Act can be found here.

The Act includes:

  • $322 billion to replenish the paycheck protection program About $60 billion of the paycheck protection program is earmarked for small lenders and community banks to facilitate loans to small businesses that have had difficulty accessing the first round of funding through the banking system. We expect the Small Business Administration to update its website and reopen their lending programs within hours of passing the Act. Both programs were depleted within days of opening in early April.
  • $60 billion for the Economic Injury Disaster loan (EIDL) program.
  • $75 billion for hospitals.
  • $25 billion for COVID-19 testing.

By way of review, the CARES Act includes many taxpayer-favorable provisions that may help reduce your personal and business taxes in 2019 and 2020 and relieve some of the financial stress from our current economic environment:

  • The deadline for making 2019 IRA contributions is extended with the tax filing deadline to July 15, 2020.
  • The 2019 SECURE Act permits tax-deductible IRA contributions after age 70 ½.
  • Waiver of the 10% penalty for distributions from a 401(k) or IRA up to $100,000 made on or after January 1, 2020, and before December 31, 2020. Distributions related to coronavirus can be repaid to the plan over 3 years to avoid taxation, or if taxable the taxes can be paid over 3 years.
  • Loans from retirement plans can be taken up to your full account balance up to $100,000 maximum. Payments due on existing plan loans through the end of 2020 can be delayed for one year.
  • Up to $300 in above-the-line deductions for charitable cash contributions, for taxpayers who take the standard deduction. The deduction does not apply to contributions to a supporting organization or a Donor Advised Fund.
  • Limitation on deduction amount for charitable cash contributions (60% of AGI for individuals who itemize) has been suspended for 2020. The suspension does not apply to contributions to a supporting organization or a Donor Advised Fund.
  • Businesses may take net operating losses (NOLs) earned in 2018, 2019, or 2020 and carry back those losses five years. The NOL limit of 80 percent of taxable income is also suspended, so firms may use NOLs they have to fully offset their taxable income.
  • The net interest deduction limitation for businesses, which currently limits businesses’ ability to deduct interest paid on their tax returns to 30 percent of earnings before interest, tax, depreciation, and amortization (EBITDA), has been expanded to 50 percent of EBITDA for 2019 and 2020. This will help businesses increase liquidity if they have debt or must take on more debt during the crisis.

Information on SVB Private’s participation in the payroll protection program can be found here. For any questions you may have or to learn more about how SVB Private can help you and your business please reach out to your SVB Private advisor.


SVB Private is pleased to announce a partnership with Doug Fisher, a Washington Policy expert, who will offer a series of insights into a number of reform proposals making their way through Congress. Doug provides strategic insight into the political and policy developments in Washington which impact the wealth management business. Advising wealth management clients on business, tax, and retirement issues, he helps firms and their clients understand the legislative and regulatory landscape and how to maximize business opportunities.

Doug served as tax counsel to the U.S. Senate Finance Committee and led the development of the Roth IRA, Simple retirement plan, the health savings account, and the 529 college savings plan. He co-authored the Small Business Jobs Protection Act, the Balanced Budget Act of 1997 and the Health Insurance Portability and Accountability Act.


After serving on the Senate Finance Committee, Doug led Fidelity Investments’ federal government relations and public policy teams. During that time, he focused on financial services, tax, retirement, and health care policy impacting Fidelity and its clients.

The views expressed in the article are those of the author and/or person interviewed and do not necessarily reflect the views of SVB Private or other members of Silicon Valley Bank Financial Group. The materials on this website are for informational purposes only, are subject to change and do not take into account your particular investment objective, financial situation or need. Since each client’s situation is unique, you should consult your financial advisor and/or tax planning professional before acting on any information provided herein