CARES Act Information For Businesses

Emergency Relief

• Provides $500 billion to the Treasury Department’s Exchange Stabilization Fund to offer loans, loan guarantees, and other investments to businesses, states, and municipalities in 2020. This funding includes:

o $425 billion for loans, loan guarantees and investments in support of Federal Reserve
lending facilities established to provide liquidity to eligible businesses, states and

o Direct lending to the following industries: $50 billion for passenger airlines, $8
billion for cargo airlines, and $17 billion for businesses critical to “maintaining
national security.”

7(a) Loans – Paycheck Protection Program

• Establishes a new Paycheck Protection Program (PPP) to let small businesses, qualifying nonprofits, and individuals seek loans through the Small Business Administration’s 7(a) loan program.
• The program will provide $349 billion for 100 percent federally guaranteed loans from February 15, 2020 through June 30, 2020. All borrower and lender fees will be waived.
• Delegated authority will be granted to SBA certified lenders to process, close, and service a PPP loan. The Treasury will be adding new lenders to the program to increase speed and turnaround of loans.
• Applicants are eligible to apply for a PPP loan until June 30, 2020.
• Loans will be made available for small businesses with 500 or less employees, or for businesses within an industry that has an employee-based size standard through SBA that is higher than 500.

o This eligibility includes 501(c)(3) nonprofits, veterans’ groups, tribal businesses, and hotel and food service chains with no more than 500 employees per location.

• Sole proprietors, independent contractors, and other self-employed individuals are also eligible, provided the following documentation is submitted:

o Payroll tax filing reported to the IRS.

o Forms 1099-MISC.

o Income and expenses from the sole proprietorship.

• Eligible recipients can receive loans for as much as $10 million or 250% of their average monthly payroll costs. Interest rates during the covered period would be capped at 4%.
• The average monthly payroll costs shall be based off the one year average for 2019. For businesses not in operation during 2019, the average monthly payroll costs shall be based off the period beginning January 1, 2020 and ending on February 29, 2020.
• For sole proprietors, independent contractors and other self-employed individuals, payroll
cost is defined as:

o “the sum of any payments of compensation to or income of a sole proprietor or independent contractor that is a wage, commission, income, net earnings from self-employment, or similar compensation that is not more than $100,000 in one year, as pro-rated for the covered period.”

• Recipients can use the loans to cover eligible payroll costs – including salaries, commissions, regular paid leave, and health-care benefits – as well as rent, mortgage interest, and utility payments. They’d have to make a “good faith certification” that they’ll use the funds to retain workers, maintain payroll, and pay for rent and similar expenses.

Loan Forgiveness

• Recipients of SBA-guaranteed loans under the PPP can apply for loan forgiveness for eight weeks of eligible payroll costs and for mortgage interest, rent, and utility payments.
• Loan forgiveness would be reduced for businesses that fire employees or cut their pay. Businesses could receive additional forgiveness for wages paid to tipped employees.
• For businesses that lay off employees during the covered period, the forgiveness will be reduced by the percentage decrease in the number of employees. Additionally, if your total payroll for workers making less than $100,000 annually decreases by more than 25 percent, forgiveness will be reduced by an equal amount.
• For businesses that already laid off employees before the covered period, the full amount of the loan can still be forgiven if you rehire the employees by June 30, 2020.

Disaster Assistance – Economic Injury Disaster Loan (EIDL) Program

• Provides $10 billion to expand the SBA’s disaster loan program from January 31, 2020 through December 31, 2020, to cover businesses, cooperatives, employee stock ownership plans, and tribal businesses with 500 or fewer employees, as well as sole proprietors and independent contractors.
• Provides low interest loans of up to $2 million that can be used for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.
• If you have a received a PPP loan, you may still apply for EIDL if used for a different purpose than PPP loan.
• If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advanced amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP.
• Provides for an Emergency Grant advance of up to $10,000 to an eligible entity who has applied for an EIDL loan due to COVID-19, which the SBA must distribute within 3 days. Applicants will not be required to repay the advance payment.
Payroll Tax Deferral
• Allows employers to defer payroll and railroad retirement tax payments through the end of 2020. Deferred funds would be paid over two years in 2021 and 2022.
• Deferral wouldn’t apply to employers with small business loan debt forgiven under the bill. Employee Retention Credit
• Establishes a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis. •  • The credit is available to employers whose (1) operations were: fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50% when compared to the same quarter in the prior year.