Information for Your Business from the CARES Act (Coronavirus Aid, Relief, and Economic Security Act)
**DECEMBER 22 UPDATE**
On December 20, 2020, Congress agreed on a new $900 billion Covid relief package, which includes an additional $284 billion for the Paycheck Protection Program (PPP) for small businesses, created under the original Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) in March.
This new package provides additional funding for those businesses that did not receive PPP money in the first round. In addition, it allows businesses a second chance at PPP money if they can show losses of 25% or higher in 2020 over their 2019 revenue.
Here are the details of the package:
Paycheck Protection Program (PPP) - Small Business Administration
Establishes 2nd Draw criteria:
Emergency Capital Investment Program - Treasury
A new program serving minority depository institutions (MDIs) and community development finance institutions (CDFIs) that are depository institutions
$600 to individuals earning $75,000 or less per year and plus an additional $600 for every dependent child; decreasing amounts for those earning $75,001 or more at a rate of -$5 for every $100 over the earning limit
On December 20, 2020, Congress agreed on a new $900 billion Covid relief package, which includes an additional $284 billion for the Paycheck Protection Program (PPP) for small businesses, created under the original Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) in March.
This new package provides additional funding for those businesses that did not receive PPP money in the first round. In addition, it allows businesses a second chance at PPP money if they can show losses of 25% or higher in 2020 over their 2019 revenue.
Here are the details of the package:
Paycheck Protection Program (PPP) - Small Business Administration
- 501(c)6 organizations are eligible to participate, including economic development organizations that are registered as 501(c)6 organizations, if:
- Less than 300 employees
- Not more than 15% of gross receipts from lobbying activities
- Not more than 15% of organization activity constitutes lobbying
- Not a professional sports league or political campaign or activity
- Effective date is ‘as if it were included in the CARES Act’, meaning 501(c)6 organizations are effectively retroactively eligible. Program extended until March 31, 2021·
- Gross income does not include any forgivable amount of the PPP loan
- Deductions are allowed for deductible expenses paid for by any forgiven amount from PPP loan
- Loans less than $150,000 require simple certification in the form of a one-page letter from the borrower to the lender stipulating basic criteria and providing simple, high-level details
- Covered operations (software, tech, human resources, etc), covered property damage (associated with ‘disturbances’ happening during 2020), covered supplier costs (supplies, inventory, etc), covered health and safety expenses (PPE, testing, etc) were further clarified as eligible uses of PPP loans and eligible for forgiveness
- Benefits such as life insurance, disability insurance, vision and dental were also clarified to be eligible covered expenses
- Borrower may select their covered period end date, between 8 and 24 weeks after origination.
- $284.45 billion appropriated in latest round of PPP (program total authorization rises to $806.5 billion lifetime) and includes a number of carve-outs:
- $35 billion set aside for first-time borrowers
- $25 billion is set aside for smaller organizations with 10 employees or less or loans less than $250,000 in low-income areas.
- $15 billion in guarantees for CDFI’s and MDI’s to participate in the program
Establishes 2nd Draw criteria:
- Max loan amount of $2 million
- For organizations with less than 300 employees
- Must have used or will use the full amount of first PPP loan
- Must show at least a 25% reduction in revenue in the first, second, or third quarter of 2020 as compared to the same period in 2019; applications submitted on or after January 1, 2021, may use a fourth quarter 2020/2019 comparison
- 60/40 cost allocation between payroll and non-payroll costs to receive full forgiveness remains the same for 2nd Draw
Emergency Capital Investment Program - Treasury
A new program serving minority depository institutions (MDIs) and community development finance institutions (CDFIs) that are depository institutions
- $9 billion in appropriations; $4 billion set aside for institutions with less than $2 billion in assets; $2 billion set aside for institutions with less than $500 million in assets
- Long-term, low-cost capital investments for institutions who have a plan to significantly increase lending or investment activity in LMI minority communities
- Pandemic Unemployment Assistance (PUA) is extended until March 14, 2021, and the maximum number of weeks of eligibility is extended from 39 weeks to 50 weeks
- Pandemic Emergency Unemployment Compensation (PUEC) is extended until March 14, 2021 and the number of weeks of eligibility is extended from 13 weeks to 24 weeks
- Federal Pandemic Unemployment Compensation is reinstated at $300 per week from the week after December 26, 2020 and runs through March 14, 2021
$600 to individuals earning $75,000 or less per year and plus an additional $600 for every dependent child; decreasing amounts for those earning $75,001 or more at a rate of -$5 for every $100 over the earning limit
Learn about the impacts of the “CARES Act” on you and your business below.
The Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act” passed the U.S. Senate last night, March 25, and is headed to the U.S. House of Representatives for consideration as soon as today March 26. This is a $2 trillion stimulus bill which will provide economic relief to individuals, families, small businesses and other sectors of the United States economy that took a hard hit due to the pandemic. Once this is passed in the House and signed by the president, most provisions are available to individuals and businesses almost immediately.
Summary of Key Provisions
Business Provisions
$500 billion in loans to eligible businesses
$350 billion in small business loans administered nominally through the SBA, called the “Paycheck Protection Program.” Loans will be administered through local and regional banks; any federally regulated bank may become an SBA lender for this purpose. The Department of the Treasury will issue regulations for these loans quickly. SBA lenders will be able to determine eligibility credit worthiness by determining whether a borrower was operational on March 1, 2020 and had employees that they paid salaries and payroll tax. The government guarantee of 7(a) loans would be increased to 100% through the end of 2020, at which point the guarantee would return to 75% for loans over $150,000 and 85% for loans less than or equal to $150,000. The complete deferment of 7(a) loan payments are permitted for up to one year.
Tax Provisions
Health Care Provisions
Labor Provisions
Individual Provisions
Other Provisions
For the latest information from the U.S. Chamber of Commerce, please click HERE.
The Forsyth County Chamber seeks to provide access to recommendations, regulations, services and expertise to its members. During the COVID-19 pandemic, this mission remains constant. Prior to acting, members should consult their own professional advisors for information and counsel specific to the individual and unique situations faced by organizations, individuals and corporations. The opinions, interpretations and recommendations of the Forsyth County Chamber are informational only and should not be relied upon by the recipient as legal or professional advice. The Forsyth County Chamber makes no representations as to the accuracy or reliability of the content contained herein. Users of this information accept any and all risks associated with the use of such information and agree that the Forsyth County Chamber has no liability to user.
The Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act” passed the U.S. Senate last night, March 25, and is headed to the U.S. House of Representatives for consideration as soon as today March 26. This is a $2 trillion stimulus bill which will provide economic relief to individuals, families, small businesses and other sectors of the United States economy that took a hard hit due to the pandemic. Once this is passed in the House and signed by the president, most provisions are available to individuals and businesses almost immediately.
Summary of Key Provisions
Business Provisions
$500 billion in loans to eligible businesses
- Targeted at companies that do not receive adequate relief from other provisions of the bill, located in the U.S. and with a predominantly U.S. employee base
- Eligible businesses must maintain employment levels from March 24, 2020 to September 30, 2020
- Prohibits stock buybacks, dividend payments and increasing compensation for certain high wage employees
$350 billion in small business loans administered nominally through the SBA, called the “Paycheck Protection Program.” Loans will be administered through local and regional banks; any federally regulated bank may become an SBA lender for this purpose. The Department of the Treasury will issue regulations for these loans quickly. SBA lenders will be able to determine eligibility credit worthiness by determining whether a borrower was operational on March 1, 2020 and had employees that they paid salaries and payroll tax. The government guarantee of 7(a) loans would be increased to 100% through the end of 2020, at which point the guarantee would return to 75% for loans over $150,000 and 85% for loans less than or equal to $150,000. The complete deferment of 7(a) loan payments are permitted for up to one year.
- Targeted at companies with less than 500 employees or otherwise specified by SBA standards
- Loans can be used for payroll, mortgages, rent, insurance premiums and utility payments.
- Up to $10 million per company available
- Cannot apply for SBA disaster loan related to COVID 19 and loans under this program at the same time
- Loans can be forgiven up to the amount spent by the borrower during the eight weeks from loan origination on payroll costs up to $100,000 in wages, mortgage interest, rent or utilities
- Forgiveness is reduced by layoffs or pay reductions in excess of 25%.
- Forgiveness is not treated as taxable income
- Additionally, $24 billion is set aside for relief to stabilize the farm economy
Tax Provisions
- Companies may use tax losses in 2018, 2019 and 2020 to offset income from the prior five years.
- The maximum amounts of business interest deductions are increased for 2019 and 2020 from 30% of to 50%.
- Allows an employer to defer its share of 2020 payroll tax and pay them over two years
- The 2018 tax reform bill imposed a one-time tax on earnings held overseas, which could be paid over eight years. The IRS has taken the position that companies cannot receive refunds until the eight-year period is completed. The bill overturns the IRS position.
- Creation of a new, temporary refundable payroll tax credit for companies who keep workers on their payroll during the COVID-19 pandemic, up to $5,000 per worker.
- Companies may accelerate recovery of Corporate Alternative Minimum Tax (AMT) Credits.
- Businesses in retail, restaurants and hotels to write off certain facilities improvements immediately
Health Care Provisions
- $150 billion for hospitals and other health facilities, which will come from the Department of Health and Human Services (HHS) and more funding for small and rural hospitals
- Provides permanent liability protections for makers of PPE that are called for public health emergency countermeasures
- Clarifies no COVID-19 cost sharing for private insurance, requires free vaccine coverage without cost sharing following current vaccine practices guidelines and includes a range of public health measures to address COVID-19 treatment and response, including liability protections for doctors who volunteer
- Removes barriers and facilitates telehealth services, especially for high deductible health plans that utilize health savings accounts. Provides $200 million to boost telehealth services
Labor Provisions
- Sets a cap on maximum payments employers will be required to pay for new emergency paid leave requirements. The provision also allows employers to receive an advance tax credit on paid leave rather than having to be reimbursed on the back end.
- Provides individuals an additional $600 per week for up to four months on top of state unemployment benefits. The provision also establishes short-term compensation programs for states like Georgia that allow for employers to reduce workers’ hours while still providing employees a pro-rated unemployment benefit
Individual Provisions
- CARES Act provides checks of up to $1,200 to single individuals and $2,400 to married couples (as well as $500 per child). Check amounts begin to reduce as income exceeds a threshold amount ($75,000 for individuals/$150,000 for married filers) and are completely eliminated once income reaches $99,000 for individuals/$198,000 for joint filers with no children.
- Waives the 10% penalty for distributions from certain retirement plans. Only applicable to individuals diagnosed with COVID-19, whose spouse or dependents have been diagnosed or who experience adverse financial consequences from the virus.
Other Provisions
- $25 billion for food assistance programs
- $30 billion for emergency education funding for colleges, universities, states and school districts
- Waives the matching requirement for campus-based aid programs and it will allow institutions to transfer unused work study funding as a supplemental grant. This can be distributed to students who were unable to work due to workplace closures. Additionally, students who had to dropout due to COVID-19, grades will not affect federal academic requirements.
- The bill would also establish a temporary universal charitable deduction provision for gifts up to $300 and the temporary suspension of percentage of AGI limitation for cash charitable contributions by individuals (as well as an increase in the limit for corporations).
For the latest information from the U.S. Chamber of Commerce, please click HERE.
The Forsyth County Chamber seeks to provide access to recommendations, regulations, services and expertise to its members. During the COVID-19 pandemic, this mission remains constant. Prior to acting, members should consult their own professional advisors for information and counsel specific to the individual and unique situations faced by organizations, individuals and corporations. The opinions, interpretations and recommendations of the Forsyth County Chamber are informational only and should not be relied upon by the recipient as legal or professional advice. The Forsyth County Chamber makes no representations as to the accuracy or reliability of the content contained herein. Users of this information accept any and all risks associated with the use of such information and agree that the Forsyth County Chamber has no liability to user.
