On March 27, the CARES Act was passed by the federal government to help small businesses owners and their employees get through the tumultuous time brought on by the COVID-19 outbreak. The legislation is robust with several strategies aimed at providing aid for people impacted by forced closures and social distancing.
Economic Support for Small Businesses
The CARES Act has designated $10 billion for immediate Economic Injury Disaster Loan (“EIDL”) grants to small businesses and nonprofits that apply for an EIDL. An EIDL is a loan for a business to pay fixed debts, payroll, accounts payable and other liabilities. A recipient of such a grant will have no obligation to repay this grant if for some reason the EIDL application is subsequently denied.
Paycheck Protection Program
Perhaps one of the best provisions under the CARES Act, the Paycheck Protection Program offers small businesses the chance to take out a loan to assist them during these trying times. Qualifying businesses can borrow up to a maximum of $10,000,000 to keep supporting employees while making adjustments.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act authorized direct payments to individuals, generous monthly rebates to families with children, and extended unemployment benefits for laid-off workers. It was signed on March 27, 2020.
The Paycheck Protection Program, implemented by the Small Business Administration with the support of the Department of the Treasury, offers loans to small and medium-sized businesses that were in good financial shape before the pandemic. The CARES Act also exempts certain businesses from SBA membership rules.
Tax Provisions and Stimulus Checks
The stimulus package offers $2.1 trillion in aid to individuals and businesses. Some of this money is earmarked for small businesses.
The CARES Act includes several tax provisions designed to do so through the US Internal Revenue Code. These tax provisions relate to industry-specific excise taxes, payroll taxes, income taxes and credits, charitable organizations, and tax-deferred retirement savings.
The CARES Act provides a 2020 refundable tax credit. $1,200 for incomes up to $75,000, $2,400 for joint filers with incomes up to $150,000.
The second stimulus check base is $600. Under the CARES Act, each person got up to $1,200. The new Act caps at $600.
Employees get $600 weekly if receiving $1+ regular unemployment. People with 2019 adjusted gross incomes up to $75,000 single or $150,000 joint get full checks.
Businesses, nonprofits, veterans organizations with under 500 employees qualify, exceptions over 500 employees. Provisions extend through March 2021, reimbursing states for unemployment costs.
Students submitted 2019-2020 FAFSA qualify. Funds mitigate COVID-19 public health responses. The deadline to request forbearance is September 2021.
If laid off or closed business over COVID-19, 401(k) withdrawals qualify. Diagnosed people, spouses, dependents also qualify. The funds ease pandemic financial burdens.