CARES (Coronavirus Aid, Relief, and Economic Security) Act

* subject to change

Best/accurate info at or

Phase 3, March 27, 2020
$2 Trillion
Support loans and loan guarantees for large businesses and governments
Small business loans & grants
Unemployment insurance expansion
Issue one time checks (tax rebates)
Cut business taxes
Support state and local governments
Increase health related spending
Support the safety net
Increase disaster assistance
Increase education spending
Support transportation providers and industries
Reduce individual taxes
Free coronavirus testing

Businesses can’t receive loans from the same program twice in the same period and to cover the same costs. You can accept both an EIDL and PPP loan as long as the purpose for each loan and the costs that it covers are different.


  • Generally better for small business
  • Generally Best Option if Qualify
  • 4/2/2020 Treasury Secretary Steven Mnuchin Encourage EVERYBODY to apply over next week
    • Will immediately ask Congress for more money to sustain the program if the money runs out (phase 4)
    • Have an additional $6 Trillion dollars to put into economy
  • $350 Billion
  • 100% federally guaranteed loans to small businesses to maintain payroll
  • Covered period 2/15/2020-6/30/2020
  • Priority to
    • Veterans/military
    • Small businesses owned by disadvantaged individuals/minorities
    • Women
    • Businesses operating < 2 years
  • Apply at bank
    • The SBA requires the owner of the business to complete and sign the SBA Application.
      • Per FirstBank: “Please do not have your CPA or financial advisor attempt to complete this form for you. We cannot process your application if it is not signed directly by the business owner(s).”
    • Form changed during week last week. Some people having to apply twice.
  • Eligible Entity
    • Employer<500 employees
    • Sole proprietor
    • Independent contractor
    • Self-employed regularly caries on trade or business
    • In operations before Feb 15, 2020
  • Lenders looking for
    • Loan used to
      • Maintain payroll
        • OR
      • Make mortgage, lease, and utility payments
    • Independent Contractors
      • Payroll tax filings
      • 1099-MISCs
      • Income & Expense from sole proprietorship
    • How much can I borrow?
      • 5X borrower’s average monthly payroll costs, <$10 million
      • calculate their aggregate payroll costs using data either from the previous 12 months or from calendar year 2019
      • Included Payroll Cost
        • Employers
          • Annual Salaries <$100K/employee
            • exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits,
          • Tips
          • Vacation, sick leave, etc.
          • Health care benefits including insurance premiums
          • Retirement benefits
          • State or local payroll taxes (no FICA)
          • Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll
        • Sole Proprietors/Independent Contractors/Self-Employed
          • Compensation
          • NET earnings from self-employment
          • <$100K
        • Loan Forgiveness
          • May be forgiven IF borrowers MAINTAIN payrolls during crisis OR RESTORE payrolls afterward
          • How Much?
            • Only principal forgiven
            • Spend funds within 8 weeks following loan origination on:
              • Payroll costs
              • Mortgage Interest
              • Rent/Lease
              • Utilities
                • Electricity
                • Gas
                • Water
                • Transportation
                • Internet
              • Likely not more than 25% of the forgiven amount may be for non-payroll costs (mortgage interest, rent, utilities)
            • Reduction of Loan Forgiveness
              • If reduce
                • Number employees
                • More than 25% wages
              • What if I BRING BACK employees OR RESTORE wages?
                • Reduction in employment or wages that occur beginning February 15,2020 shall not reduce amount of loan forgiveness IF by June 30, 2020, “The borrower eliminate the reduction in employees or reduction in wages.”
                • “Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.”
              • If NOT forgiven
                • interest rate = 1% over 2 year term
                • payments deferred 6 months
                • 10 yrs maturity


                 Emergency Injury Disaster Loan (IEIDL)

  • Eligible Entity
    • Employer<500 employees
    • Individual who operates as Sole proprietor (with or without employees)
    • Individual who operates as Independent contractor
  • Up to $2 million can be provided to help meet financial obligations and operating expenses that could have been met if the disaster did not occur, think of this as working capital.
  • The interest rate on EIDLs
    • 75% interest rate for Small Businesses.
    • 75% interest rate for non profits.
  • First payment will be deferred and not become due until one year after the original disbursement. Interest does accrue doing this time.
  • Maximum term allowed = 30 years
  • If take this and then take out PPP loan, reduce PPP loan forgiveness

                Emergency Economic Injury Grants

  • Expands EIDL program adding special $10K effective grants
  • Covered period 1/31/2020-12/31/2020
  • Eligible Entity
    • Employer<500 employees
    • Individual who operates as Sole proprietor (with or without employees)
    • Individual who operates as Independent contractor
    • Must have been in operation on Jan 31, 2020
  • Loan but can be forgiven
  • Receive in 3 days
  • Limit on what spend on:
    • Paid sick leave direct result from COVID-19
    • Payroll to retain employees during business disruption or slowdown
    • Increased costs to obtain supplies due to interrupted supply chains
    • Rent or mortgage business payments
    • Repaying obligations cannot be met due to revenue losses
  • If spend on these things, not repay

Employee Retention Credit

    • For employers subject to closure due to COVID-19
    • Large companies
    • If can’t get PPP loan (like airlines)
    • Can’t claim if get PPP SBA Loan
    • 50% of payroll
    • For wages paid after 3/12/2020 through 12/31/2020
    • up to $10K/per employee ($5K credit per employee)
    • Eligible
      • Can’t operate fully or only partially
        • OR
      • Full open but 50% or more decline gross receipts
    • Form 7200

Employer Social Security Deposit Delay

    • Can’t defer if use SBA PPP loan forgiveness
    • Effective date 3/27/2020 through 12/31/2020
    • Due 12/31/2021 & 12/31/2022

Recovery Rebate for Individuals

    • Direct payments
    • Based on 2018 or 2019 returns
    • $1,200 to individual
    • $500 per child (under 17 yrs)
    • Getting in 2 weeks (trying to do in 2 weeks)
    • Phase out for AGI
    • IRS will mail notice when payment made

Net Operating Loss Carryback

    • NOL Carryback eliminated by TCJA, but CARES temporarily reinstated

Charity deduction now above the line instead of below the line

    • Only works if not itemizing
    • $300 limit
    • Only 2020

Access to Pension/Retirement Funds

    • No penalty for early withdrawal up to $100K
    • Allows immediate access
    • Can take 401K loans

Student Loans

    • Exclusion available for employers paying tuition as fringe benefit is expanded
    • For small employers, not attractive

Distilled Spirits Hand Sanitizer

    • 2020 – excise tax not apply if spirits used for hand sanitizer
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