What Childcare Providers Need to Know About the December 2020 COVID-19 Relief Package

The newest COVID-19 relief package includes many components that could directly impact early education providers: $10 billion for the childcare industry, additional funding for the Paycheck Protection Program, and a second round of individual relief measures, including stimulus checks and extended unemployment benefits. Here’s what you need to know about each benefit. 

  1. $10 billion in funding for the childcare industry, including $250 million for the Head Start program

What it is: The December 2020 pandemic relief package includes $10 billion for childcare to help bolster the industry’s essential services. The majority of this funding will go toward the Child Care & Development Block Grant (CCDBG) to help childcare providers cover additional operational costs associated with COVID-19, including payroll, cleaning supplies, and rent. Of this $10 billion, $250 million will also go to the Head Start program to provide additional relief to infants, toddlers, and preschoolers from low-income families. 

Who will qualify: Childcare centers may be eligible to receive funding from the CCDBG whether or not they are serving children receiving subsidies. The funding will go directly into state-funded subsidy programs (i.e., Head Start) and grants. Remember, in most states, any children on subsidy will also continue to receive full tuition coverage, so connecting your families with subsidy resources may benefit you both.
 

How to take advantage of this benefit: Since CCDBG funding will be distributed by individual state agencies, reach out to your local CCR&R agency, which can help you find and apply for grants. You may also want to consider connecting certain families with childcare financial assistance resources.

  1. A second round of Paycheck Protection Program loans

What it is: The Paycheck Protection Program (PPP) is designed to encourage lenders to provide loans that help small businesses make payroll, provide benefits to workers, and make necessary payments, such as utilities, mortgage, and rent. 

The bill includes $284 billion through the U.S. Small Business Administration for first-time and second-time PPP loans to small businesses, specifically noting that childcare programs are eligible for these funds. Borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan.

These loans will be eligible for forgiveness if at least 60% of the loan is spent on payroll. Up to 40% of the loan may be spent on rent, mortgage interest, utilities, operations expenditures (such as business software), supplier costs, property damage, and worker protection expenditures (such as personal protective equipment).

Who will qualify: Businesses that have not received previous PPP funding are eligible to apply if they have 500 or fewer employees. (There are a few uncommon criteria that would disqualify a business from receiving a PPP loan, such as businesses with at least 20% ownership by China, but these will not apply to the vast majority of childcare providers.)

Businesses that have received PPP funding previously are eligible if they have 300 or fewer employees, have used (or will use) the full amount of their first PPP loan, and can demonstrate a gross revenue decline of 25% or more in any 2020 quarter compared with the same quarter in 2019.

How to take advantage of this benefit: The second round of PPP loans opened on Monday, January 11 and will close on March 31. Visit the U.S. Small Business Administration’s (SBA) loan program website to find potential lenders that can offer loans to your center. 

It's critical to apply early because of the high demand for PPP loans. If you have applied for loans previously, keep your paperwork or digital application files handy to save time on your next application.

A second round of stimulus checks and extended unemployment relief 

What it is: Every adult earning up to $75,000 and dependent child will receive a $600 stimulus check. Direct deposits are expected to begin the week of January 4, and paper checks are expected to go out the week of January 11.

The new COVID-19 relief package also adds $300 to weekly unemployment payments through Mid-March, and ensures that typically ineligible gig workers, such as self-employed and contract workers, will continue receiving jobless checks.

Additionally, this new measure strengthens the child tax credit, ensuring that families who faced unemployment or reduced wages during COVID-19 are able to receive a strong tax credit based on their 2019 income.

Who will qualify: All adults earning less than $75,000 a year and dependent children will receive a $600 direct payment, and individuals who earn between $75,000 and $99,000 will receive reduced payments. Married couples earning up to $150,000 will receive $1,200, with reduced payments for joint incomes between $150,000 and $174,000. Adult dependents will be excluded from this benefit.

Everyone eligible for unemployment checks will qualify for the additional $300 per week, and individuals receiving state-level benefits and checks from the Pandemic Unemployment Assistance program qualify for the extension until March 14th. 

How to take advantage of this benefit: If you or your families will qualify for this benefit, you may want to use Forbes’ stimulus check calculator to help you gauge how much you might receive from the IRS. 

While there are no stipulations on how this money must be spent, many families with young children will likely use at least some of their stimulus funding to pay for childcare. If you have families who were considering withdrawing from your program because their supplemental unemployment benefits were set to expire soon, reach out to make sure they understand their new benefits and see how this news may impact their plans.

 

We continue to be inspired by your commitment to your families and students, and hope this resource helps to clarify the benefits you can take advantage of now from the newest COVID-19 relief program. 

To learn more about how to operate your center effectively during this challenging time, download our free eBook, 4 Keys to Building a More Resilient Early Education Center During COVID-19! 


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