Understanding the $2.2 trillion CARES Act
Our partners at Visit California have compiled information and resources to better understand the Coronavirus Aid, Relief, and Economic Security Act (CARES). Read below for more information and detailed links to help understand what this means for your business.
Congress approved the $2.2 trillion CARES Act to provide relief for businesses and employees hit hard by the coronavirus outbreak. Read below for brief descriptions of the main components, with links to more detailed documents provided by the U.S. Small Business Administration, Senate Committee on Small Business and Entrepreneurship, and the U.S. Travel Association.
Coronavirus Economic Injury Disaster Loans/Grants
This program allows small businesses to borrow up to $2 million with a maximum 4 percent interest to make payroll or most operating expenses. Loan applicants will get $10,000 within three days, and can keep the money even if the loan is denied. Eligibility: Self-employed businesses with fewer than 500 employees (and those with more if they meet these SBA standards) and all non-profits. Read more from U.S. Travel.
Business Interruption Loans (Paycheck Protection)
This gives 100 percent guaranteed loans of up to $10 million at maximum 4 percent interest to cover payroll, rent, mortgage, utilities and other costs of doing business. Loans may be forgiven if a business has the same number of employees on June 30 that it did prior to the crisis. Eligibility: Self-employed, businesses with 500 or fewer employees, with some exceptions, some non-profits. Read more from the Senate Committee on Small Business and Entrepreneurship.
Small Business Debt Relief
This allows small businesses with outstanding SBA 7(a) loans, new SBA 7(a) loans, 504 loans (for purchase or improvement of capital assets) to have all principal and interest covered for six months. Eligibility: Any business with a SBA 7 (a) or 504 loan or that qualifies for one. Read more from the Small Business Administration, Senate Committee on Small Business and Entrepreneurship (Page 6) or U.S. Travel.
SBA Express Loans
Raises the limit for express loans from $350,000 to $1 million through 2020. Interest is capped at 9.5 percent for loans more than $50,000. Eligibility: Small businesses with 500 or fewer employees or $7 million or less in annual receipts. Must have been in business for at least two years. Non-profits and marketing organizations are ineligible. Read more from U.S. Travel.
Business Tax Relief
Several tax provisions will help small businesses, including:
- Net operating losses from 2018, 2019 and 2020 can be carried back for five years.
- Employers can defer all of their Social Security payroll taxes for 2020, repaying half by the end of 2021 and the other half by the end of 2022.
- Employers, including non-profits, whose operations have been disrupted by government orders limiting group travel and meetings or whose quarterly receipts are half what they were year over year are eligible for tax credits for 50 percent of wages paid to certain employees.
Read more from the Senate Committee on Small Business and Entrepreneurship (Page 11).
Emergency Stabilization Fund
Nearly half a trillion dollars was allocated to the U.S. Treasury Department to develop loan programs through the Federal Reserve to benefit an array of impacted businesses. Those programs will emerge in the coming weeks. Broad categories of programs include:
- Direct loans through the Federal Reserve
- Secured loans through banks
- Direct funding via bonds
- Loans for mid-sized businesses and non-profits
Eligibility: All U.S. businesses, non-profits, states, local governments, including DMOs, although Treasury and the federal Reserve can determine further eligibility.
Read more from U.S Travel.