On March 27, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion aid package in responses to the COVID-19 crisis.

As it relates to business, the Act creates a “Small Business Paycheck Protection Program,” which is a new $349 billion lending program modeled on the existing SBA 7(a) program with 100 percent government guarantee as opposed to 75 percent guarantee for 7(a) loans.

Also, the Act allocates:

• $10 billion for SBA emergency grants of up to $10,000 to provide immediate relief for business operating costs once a small business or nonprofit has applied for an Economic Injury Disaster Loan;
• $17 billion for SBA to cover six months of payments for small businesses with existing SBA loans;
• Allows rent, mortgage and utility costs to be eligible for SBA loan forgiveness.

Additionally, it makes changes to the SBA’s Economic Injury Disaster Loans, including:

• Loans can be made based solely on credit scores;
• Loans will be made available to all nonprofits, including 501(c )(6)s;
• Loans below $200,000 can be approved without a personal guarantee;
• Borrowers can receive $10,000 cash advances that are forgiven if spent on paid leave, maintaining payroll, increased costs due to supply chain disruption, mortgage or lease payments, or repaying obligations that cannot be met due to revenue losses.

The CARES Act also includes a series of business tax provisions, including:

• Employee retention credit for employer’s subject to closure due to COVID-19 (permits fully refundable 50 percent tax credit applicable to the employer’s share of payroll taxes on wages up to $10,000 per employee; widely available with special rules for small employers);
• Delay of payment of employer payroll taxes (defer payment of the employer share of the Social Security tax due between now and January 1, 2021 to December 31, 2021 (50 percent due) and December 31, 2020 (remaining due);
• Modifications for net operating losses (for 2018, 2019, 2020, loss can be carried back 5 years, temporarily suspends 80 percent limitation; extends to pass-throughs, sole proprietors).
• For larger industries, the Act allocates $500 billion in loans, including $25 billion for passenger airlines; $4 billion for carriers; $3 billion for aviation contractors and $17 billion for “businesses critical to maintaining national security."

Other Major Provisions of CARES ACT:

• $260 billion for workers. An extended and expanded Unemployment Insurance program increases the maximum unemployment benefit amount by $600 per week above one’s base unemployment compensation benefit through July and ensures that workers who are laid-off or out of work, on average, will receive their full pay for four months. It ensures that workers are protected whether they work for businesses small, medium or large, along with self-employed and workers in the gig economy.
• Direct payments to families. $1,200 for most individuals, $2,400 for couples and $500 per child.
• $150 billion for hospitals, health care facilities. This includes a massive new grant program for hospitals and health care providers, personal and protective equipment for health care workers, testing supplies, increased workforce and training, new construction to house patients, emergency operation centers and more. Additional funding is also dedicated to increased Medicare payments to all hospitals and providers to ensure that they receive the funding they need during this crisis, and new investments in our country’s Strategic National Stockpile, surge capacity and medical research into COVID-19.
• $150 billion state and local government stabilization fund. This critical funding will be a temporary lifeline to states and communities that are seeing huge budget holes that have been created by the economic slowdown and response to COVID-19. While more work needs to be done, this $150 billion fund is a strong down payment that will keep communities going and ensure they have the resources to respond to this public health emergency.

To read the U.S. Chamber of Commerce Overview, click here.



To read the full bill text, click here.

To apply for a U.S. SBA Economic Injury Disaster Loan, click here.