On Friday, March 27, the Coronavirus Aid, Relief and Economic Security (CARES) Act was approved by the House of Representatives. President Trump is expected to sign it into law. The bill is designed to provide financial assistance to Americans and their families, and billions of dollars in loans for businesses. The package is the largest fiscal stimulus in modern U.S. history and is the government’s most recent response to the coronavirus disease 2019 (COVID-19) pandemic. Here is a look at the key provisions of the CARES Act for businesses.
Paycheck Protection Program
To help small businesses (those with fewer than 500 employees) impacted by the pandemic and economic downturn, $350 billion has been allocated to allow companies to make payroll and cover costs incurred between February 15 and June 30. Additionally, small businesses can take loans up to $10 million through December 31, 2020 and cover employees making up to $100,000 per year. If a business uses the loan for payroll, mortgage interest payments, rent, and utilities, the loan may be forgiven. Companies that have laid off employees may qualify for loan forgiveness if those employees are rehired by April 1, 2020. Read more details here.
Payroll Tax Credit
A 50 percent refundable payroll tax credit on wages paid up to $10,000 can be claimed by employers during the COVID-19 crisis. Employers whose businesses were disrupted due to pandemic shutdowns, and those that showed a decline of 50 percent or more in gross receipts (compared to the same quarter last year), qualify to claim the credit. The credit can be also claimed for all employee wages for companies with 100 or fewer employees, and for employees who are retained but not currently working due to the crisis for businesses with more than 100 employees.
Expanded Unemployment Insurance
The new unemployment insurance provisions allow for an additional payment of $600 each week to all recipients through the end of July 2020. Benefits have been extended to self-employed workers, independent contractors, those with limited work history, and those unable to work due to the coronavirus pandemic. Temporary full funding of the first week of regular unemployment will be provided by the federal government for states with no waiting period. UI benefits will be extended for an additional 13 weeks through December 31, 2020 after state UI benefits end.
Visit GTM’s COVID-19 payroll and HR resource center for updates on the impact of the coronavirus on businesses.