The Trump Administration’s CARES Act Provides Relief For Workers And Support For Small Businesses So They Can Keep Americans Employed During This Crisis

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The Facts:

THE CARES ACT IS PROVIDING RELIEF TO SMALL BUSINESSES AND HELPING THEM KEEP WORKERS ON THE JOB DURING THIS CRISIS

The Paycheck Protection Program provides loans to businesses to cover costs and includes strong incentives to keep paying their workers.

As part of the CARES Act, businesses are eligible for up to $10 million in loans and, to encourage businesses to keep workers on the job, the loans will be forgiven if the recipient maintains payroll at pre-crisis levels.

The CARES Act also includes a payroll tax credit of up to $5,000 per worker for businesses who do not receive a loan from the Paycheck Protection Program.

The CARES Act expanded eligibility for the Small Business Administration’s Economic Injury Disaster Loan Program which can provide as much as $2 million of financial support to small businesses and private non-profit organizations.

Additionally, the law provides $10 billion for the program to quickly provide businesses with $10,000 “advance” grants that will not have to be repaid should the businesses spend the money appropriately.

The CARES Act also allows businesses to free up cash to cover payroll and other expenses by deferring some payroll taxes this year.

THE CARES ACT PROVIDES RELIEF FOR WORKERS WHO HAVE LOST THEIR JOBS BECAUSE OF THE CRISIS

The CARES Act supplements state unemployment benefits with an additional $600 a week, which more than doubles the weekly maximum unemployment benefits in most states.

The federal expansion also provides 13 “extra” weeks of benefits meaning that, in total, workers can qualify for up to 39 weeks of unemployment benefits during the public health crisis.

The law also ensured that all Americans out of work due to the coronavirus qualify for benefits including those whose workplace closed, those who were forced to quit their job, and those who were supposed to start a job but could not because of the virus.

Americans are also eligible for benefits if they are unable to work or are working reduced hours as a result of the coronavirus including those who have symptoms, are quarantined or are caring for someone who has the disease.

Americans who are self-employed (including gig and contract workers), work part-time or who normally wouldn’t qualify for unemployment benefits because they lack sufficient work history can also receive benefits.

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THE CARES ACT IS PROVIDING RELIEF TO SMALL BUSINESSES AND HELPING THEM KEEP WORKERS ON THE JOB

The Paycheck Protection Program Provides Loans To Businesses To Cover Costs And Works To Make Sure They Keep Paying Their Employees

The Paycheck Protection Program Is Available For All Businesses With Less Than 500 Employees, Businesses In The Hospitality And Food Industry With More Than One Location Could Also Be Eligible Level If Their Location Employs Less Than 500 Workers. “This program is for any small business with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19. Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries. Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.” (Small Business Administration, Accessed 3/30/20)

The Paycheck Protection Program Provides A Direct Incentive For Small Businesses To Keep Paying Workers As The Government Will Forgive 100% Of The Loans If All Employees Are Kept On Payroll For Eight Weeks. “The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The Paycheck Protection Program will be available through June 30, 2020.” (Small Business Administration, Accessed 3/30/20)

Businesses Are Eligible For Loans For Up To $10 Million And Each Loan Will Cover Up To Two Months Of Their Average Monthly Payroll Costs From The Last Year Plus An Additional 25% Of That Amount. “How large can my loan be? Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation. Payroll costs will be capped at $100,000 annualized for each employee.” (Treasury Department, Accessed 4/2/20)

Payroll Costs Include Wages, Plus Tips, Up To $100,000 Per Employee, Taxes, And Benefits Including Parental, Family, Medical, Or Sick Leave, Health Care And Retirement. “Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee); Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit; State and local taxes assessed on compensation; and For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.” (Treasury Department, Accessed 4/2/20)

The CARES Act Also Includes A Payroll Tax Credit Of Up To $5,000 Per Worker For Businesses Who Do Not Receive A Loan From The Paycheck Protection Program

Businesses That Do Not Participate In The Paycheck Protection Program Are Eligible For A Payroll Tax Credit Of Up To $5,000 Per Worker. “The credit, available through 2020 to ailing businesses, is equal to 50% of wages (including qualified health plan expenses) of up to $10,000 per worker. (So, the maximum credit per employee is $5,000 this year.) It’s not available for businesses that also get a loan through the Paycheck Protection Program. The credit can be claimed against quarterly payroll taxes. The Treasury can make advance payments of the tax credit, and waive penalties for employers who don’t pay applicable payroll taxes in anticipation of receiving the credit.” (CNBC, 4/1/20)

The Employee Retention Credit Is Designed To Help Businesses Keep Employees On Payroll,;The Credit Is Available To Employers, No Matter The Size Of The Business And There Is No Cap On The Number Of Employees. “One of those provisions is the Employee Retention Credit or ERC. It's found in the CARES Act in Section 2301. The ERC is designed to help businesses keep employees on payroll. The credit is available to employers, no matter the size of the business. Unlike some of the other relief, there is no cap on the number of employees.” (Forbes, 4/2/20)

Employers Qualify If Their Business Is Wholly Or Partially Suspended By Government Order Due To COVID-19 Or If Their Gross Receipts For 2020 Are Below 50% Of The Comparable Quarter In 2019. “To qualify, employers must fall into one of two categories: Your business is wholly or partially suspended by government order due to COVID-19 (like a stay-at-home or non-essential business order) during the quarter; or Your gross receipts for 2020 are below 50% of the comparable quarter in 2019.” (Forbes, 4/2/20)

The CARES Act Also Expanded The SBA’s Existing Economic Injury Disaster Loan Program To Provide Up To $2 Million In Support For Businesses Impacted By The Virus

The Small Business Administration Is Also Providing Low-Interest Economic Injury Disaster Loans Under Which Applicants Can Be Approved For A Grant Of Up To $10,000, Which Does Not Need To Be Repaid And Is Able To Be Processed In Only A Few Days. “The Small Business Administration is also providing low-interest economic injury disaster loans. One special feature of these loans is that applicants may also be approved for a grant of up to $10,000, which does not need to be repaid and is supposed to be processed in only a few days.” (The Boston Globe, 3/31/20)

The Economic Injury Disaster Loan Program Can Provide As Much As $2 Million In Financial Support To Small Businesses And Private Non-Profit Organizations That Encounter Certain Declared Disasters And The CARES Act Expanded The Program To Make It Easier For Borrowers Impacted By The Coronavirus To Qualify. “The Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) Program can provide as much as $2 million of financial support to small businesses and private non-profit organizations that encounter certain declared disasters. The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the EIDL Program to make it easier for borrowers dealing with the COVID-19 pandemic to get a loan. The application process is fairly simple, as it’s available directly through the SBA’s website.” (Yahoo Finance, 4/2/20)

“The Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) Program can provide as much as $2 million of financial support to small businesses and private non-profit organizations that encounter certain declared disasters. The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded the EIDL Program to make it easier for borrowers dealing with the COVID-19 pandemic to get a loan. The application process is fairly simple, as it’s available directly through the SBA’s website.” (Yahoo Finance, 4/2/20) The CARES Act Included $10 Billion Worth Of Funding For The SBA To Provide Businesses With Quickly Accessible Advances Of $10,000 That Will Not Have To Be Repaid Should The Businesses Spend The Money Appropriately. “The CARES Act also included $10 billion worth of funding for the SBA to provide businesses with quickly accessible advances of $10,000. Businesses that use these funds to help pay for paid leave, payroll, COVID-19 related costs and more will see the advance become a grant. Once this happens, the business will no longer need to pay back the money they received. Emergency EIDL grants are available within three days for those that apply with the SBA.” (Yahoo Finance, 4/2/20)

These Funds Are Intended To Cover Payroll And Other Operating Expenses That The Business Could Have Otherwise Met In A Non-Disaster Economy. “These funds are intended to cover payroll and other operating expenses that the business could have otherwise met in a non-disaster economy. Funds cannot be used for refinancing, making loan payments on other federal debts, to repair physical damages, to pay IRS tax penalties or to pay out dividends. While loan amounts may range up to $2 million, specific loans depend upon the amount of economic injury that a business has suffered. This amount is determined by the SBA on a case-by-case basis after businesses apply.” (Yahoo Finance, 4/2/20)

The CARES Act Also Allows Businesses To Free Up Cash By Deferring Some Payroll Taxes This Year

The CARES Act Also Allows Small Businesses To Defer Some Payroll Taxes This Year To Help Free Up Cash For Struggling Businesses. “The CARES Act also allows small businesses to defer some payroll taxes this year. Employers can defer their portion of the Social Security payroll tax — a 6.2% rate in 2020. The measure won’t necessarily save firms money because they must pay the tax later. But it could help free up cash for struggling businesses, and firms only get the benefit to the extent they have workers on payroll, experts said.” (CNBC, 4/1/20)

Small Businesses Facing Payroll Tax Payments Have The Option Of Deferring Their Share Of Social Security Taxes Until Next Year. “Small businesses facing payroll tax payments will get some relief from Congress – the option of deferring payment to Uncle Sam until next year. In particular, the $2 trillion coronavirus relief bill will permit small businesses to defer their share of Social Security payroll taxes in 2020. Payroll taxes are shared by workers and their employers, so that each pays 6.2% toward Social Security and 1.45% toward Medicare.” (CNBC, 3/27/20)

The Deferral “Adds Up Over Time” And Is Intended To Allow The Employer To Have Access To Those Funds To Be Able To Pay Employees And People On Staff. “At first blush, deferring payment on 6.2% of wages may not sound like much, yet it adds up over time. A small business that pays an employee $1,000 in weekly wages could save $2,418 over the remainder of the year, said Stephen Dombroski, senior payroll tax compliance manager at Paychex in Rochester, N.Y. ‘The intention is to allow the employer to have access to those funds to be able to pay employees and people on staff,’ he said.” (CNBC, 3/27/20)

THE CARES ACT ALSO PROVIDES RELIEF FOR WORKERS WHO HAVE LOST THEIR JOBS BECAUSE OF THE CRISIS

The CARES Act Supplements State Unemployment Benefits With An Additional $600 Per Week, And Extends Unemployment Benefits For 13 Additional Weeks

The CARES Act Expands Eligibility For Unemployment Benefits And Supplements State Benefits With An Additional $600 Per Week, Which More Than Doubles The Weekly Maximum Unemployment Benefits In Most States. “A historic $2 trillion spending package significantly bolsters relief to millions of Americans left jobless by the ongoing coronavirus pandemic. The Coronavirus Aid, Relief, and Economic Security Act expands unemployment benefits to include part-time and self-employed workers, including contractors and gig workers. It also supplements state benefits with an additional $600 a week, which more than doubles the weekly maximum unemployment benefits in most states.” (MarketWatch, 4/4/20)

The Federal Expansion Also Provides 13 “Extra” Weeks Of Benefits; Meaning That In Total, Workers Can Qualify For Up To 39 Weeks Of Unemployment Benefits During The COVID-19 Public Health Crisis. “The federal expansion provides 13 ‘extra’ weeks of benefits, meaning that in total, workers can qualify for up to 39 weeks of unemployment benefits during the COVID-19 public health crisis (26 weeks under state programs, plus 13 additional weeks provided by the federal government).” (Tax Foundation, 4/2/20)

The Law Ensures That All Americans Out Of Work Due To The Coronavirus Are Able To Qualify Including Those Impacted By The Virus, Caregivers, And Self-Employed Workers

Americans Can Receive Unemployment Benefits If They Are Unable To Work Or Are Working Reduced Hours As A Result Of The Coronavirus Including Those Who Have Symptoms, Are Quarantined Or Are Caring For Someone Who Has The Disease. “Under the CARES Act, you can receive unemployment benefits if you are unable to work or are working reduced hours as a result of the coronavirus. That includes people who are directly impacted by the virus — those who have symptoms, are quarantined or are caring for someone who has COVID-19, the disease caused by the coronavirus.” (MarketWatch, 4/4/20)

Workers Are Also Eligible If Their Workplace Closed, They Had To Quit Their Job Because Of The Virus, They Cannot Work Because They Are A Caregiver, And If They Are Supposed To Start A Job But It Fell Through Or If They Are Unable To Get To There Worksite. “You’re also covered under the following circumstances: Your workplace closed due to the public health emergency. You had to quit your job because of the coronavirus. You can’t work because you are a caregiver to someone whose school or other facility closed and you need to care for them. You were supposed to start a job but it fell through or you can’t get there because of the coronavirus.” (MarketWatch, 4/4/20)

The CARES Act Also Extends Benefits To People Who Are Self-Employed (Including Gig And Contract Workers), Work Part-Time Or Who Normally Wouldn’t Qualify For Unemployment Benefits Because They Lack Sufficient Work History. “The CARES Act also extends benefits to people who are self-employed (including gig and contract workers), work part-time or who normally wouldn’t qualify for unemployment benefits because they lack sufficient work history.” (MarketWatch, 4/4/20)

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