SUMMARY OF THE $2 TRILLION CARES ACT FOR BUSINESSES, IMPACTED WORKERS AND INDIVIDUALS

 

On Friday, March 27th, the $2+ Trillion CARES (Coronavirus Aid, Relief, and Economic Security) Act was signed into law. This is emergency legislation intended to meet urgent public health and economic needs in the face of the coronavirus crisis.

The CARES Act provides economic relief to businesses, States and municipalities, public health, safety net, education, and individuals affected by COVID-19. While the scope of the Act is wide-ranging, this guide, adapted from a summary prepared by National Public Radio (NPR), is limited to providing a high-level overview of the relief available to:

  • Small Businesses
  • Big Corporations
  • Impacted Workers
  • Individuals and Families

Here’s a graphic from NPR showing how the CARES Act’s spending breaks down:

 

BELOW IS A SUMMARY OF HELP OFFERED FOR DIFFERENT AFFECTED GROUPS

The main features of the CARES Act for small businesses are emergency grants and a forgivable loan program for companies with 500 or fewer employees. There are also changes to rules for expenses and deductions meant to make it easier for businesses to keep employees on the payroll and stay open in the near-term.

Emergency grants:

The Act provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.

Forgivable loans:

There is $350 billion allocated for the Small Business Administration (SBA) to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll, keep workers on the books or pay for rent, mortgage and existing debt could be forgiven, provided workers stay employed through the end of June.

Relief for existing loans:

There is $17 billion to cover six months of payments for small businesses already using SBA loans.

What is a “Small Business”? Generally, the SBA considers an organization to be a “Small Business” if it has 500 employees or fewer. However, there are exceptions, including for hospitality businesses.

Tax Credit:

The Act establishes a fully refundable tax credit for businesses of all sizes that are closed or distressed to help them keep workers on the payroll. The goal is to get those employees hired back or put on paid furlough to make sure they have jobs to return to. The credit covers up to 50 percent of payroll on the first $10,000 of compensation, including health benefits, for each employee.

For employers with more than 100 full-time employees, the credit is for wages paid to employees when they are not providing services because of the coronavirus. Eligible employers with 100 or fewer full-time employees could use the deduction even if they aren’t closed.

 

Click here for The Small Business Owner’s Guide to the CARES Act from the U.S. Senate Committee on Small Business & Entrepreneurship.

The Act sets aside roughly $500 billion in loans and other money for big corporations. These companies will have to pay the government back and will be subject to public disclosures and other requirements.

Airlines:

About $58 billion is allocated to help airlines stay open. One portion of that money is set aside to help cover employee wages, salaries and benefits.

Stock buyback ban:

Any company receiving a loan under the program is barred from making stock buybacks for the term of the loan plus one year.

Reporting requirements:

All loans, their terms and any investments or other assistance provided by the government must be publicly disclosed.

Tax Credit:

The Act establishes a fully refundable tax credit for businesses of all sizes that are closed or distressed to help them keep workers on the payroll. The goal is to get those employees hired back or put on paid furlough to make sure they have jobs to return to. The credit covers up to 50 percent of payroll on the first $10,000 of compensation, including health benefits, for each employee.

For employers with more than 100 full-time employees, the credit is for wages paid to employees when they are not providing services because of the coronavirus. Eligible employers with 100 or fewer full-time employees could use the deduction even if they aren’t closed.

The Act provides approximately $260 billion in help for impacted workers and makes major changes to unemployment assistance, increasing the benefits and broadening who is eligible. States will still continue to pay unemployment to people who qualify. (That amount varies state by state, as does the amount of time people are allowed to claim it.)

Extra unemployment payments:

This bill adds $600 per week from the federal government on top of whatever base amount a worker receives from the state. That boosted payment will last for four months.

For example, if an out-of-work person is receiving the national average of about $340 per week, under the new federal program, their take-home pay will be $940 per week.

The Act also adds 13 weeks of unemployment insurance. People nearing the maximum number of weeks allowed by their state would get an extension. New filers would also be allowed to collect the benefits for the longer period.

Gig workers and freelancers:

Typically, self-employed people, freelancers and contractors can’t apply for unemployment. This Act creates a new, temporary Pandemic Unemployment Assistance program through the end of this year to help people who lose work as a direct result of the public health emergency.

Cash payments for individuals and families:

Estimated to total $300 billion. Most individuals earning less than $75,000 can expect a one-time cash payment of $1,200, most likely during the month of April. Married couples would each receive a check and families would get $500 per child (the $500 per child rebate is limited to children under 17). That means a family of four earning less than $150,000 can expect $3,400.

The amount of the checks start to phase down after that and disappear completely for people making more than $99,000 and couples making more than $198,000.

The cash payments are based on either your 2018 or 2019 tax filings. People who receive Social Security benefits but don’t file tax return are still eligible, too. They don’t need to file tax returns; their checks will be based on information provided by the Social Security Administration.

Student loans:

Employers can provide up to $5,250 in tax-free student loan repayment benefits. That means an employer could contribute to loan payments and workers wouldn’t have to include that money as income.

Insurance coverage:

The Act requires all private insurance plans to cover COVID-19 treatments and vaccine and makes all coronavirus tests free.

Food stamps and food banks:

$15.5 billion is going to the Supplemental Nutrition Assistance Program, also known as SNAP. The money will help cover the expected cost of new applications to the program as a result of the coronavirus. American Indian reservations, Puerto Rico, Northern Mariana Islands and American Samoa all get additional funds and access to federal nutrition programs.

There is $450 million more for food banks and other community food distribution programs.

Help for college students and graduates:

The Act includes relief for college students and graduates with outstanding federal student debt.

Temporary student loan relief:

All loan and interest payments would be deferred through Sept. 30, 2020 without penalty to the borrower for all federally owned student loans.

Those who owe child support should not expect to receive any cash benefits.

 

ABOUT US

Workforce Alliance of the North Bay’s network of career centers, employment and training initiatives, and programs result in a regional talent pool that drives economic growth for businesses and social mobility for workers and career seekers in the North Bay.