Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

On March 27, 2020, the president signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The $2 trillion aid package will provide financial aid to families and businesses impacted by the COVID-19 coronavirus pandemic.

Small Business “Paycheck Protection Program”

A new $349 billion lending program, modeled on existing SBA 7(a) program, intended to provide small businesses with eight weeks of cash-flow assistance through 100% federally guaranteed loans.

You are eligible if you are: 
  • A small business with fewer than 500 employees
  • A small business that otherwise meets the SBA’s size standard 
  • A 501(c)(3) with fewer than 500 employees
  • An individual who operates as a sole proprietor
  • An individual who operates as an independent contractor
  • An individual who is self-employed who regulary carries on any trade or business
  • A Tribal business concern that meets the SBA size standard 
  • A 502(c)(19) Veterans Organization that meets the SBA size standard
  • Businesses in the Accommodation and Food Services Sector (NAICS Code 72) are eligible with up to 500 employees at each location
In addition, some special rules may make you eligible: 
  • If you are in the accommodation and food services sector (NAICS 72), the 500-employee rule is applied on a per physical location basis
  • If you are operating as a franchise or receive financial assistance from an approved Small Business Investment Company the normal affiliation rules do not apply

REMEMBER: The 500-employee threshold includes all employees: full-time, part-time, and any other status.

Regulatory Streamlining: 
  • SBA’s standard “no credit elsewhere” test is waived
  • All lenders (non-SBA lenders to be approved by Treasury and SBA) can provide loans
  • No personal guarantee or collateral required
  • Lenders defer fees, principal, and interest for no less than 6 months and no more than 1 year
Maximum Loans:

Generally, monthly payroll costs for 2 ½ months, not to exceed $10 million. Payroll costs exclude compensation paid to individuals, including the selfemployed, above $100,000 a year.


In evaluating eligibility, lenders are directed to consider whether the borrower was in operation before February 15, 2020 and had employees for whom they paid salaries and payroll taxes or paid independent contractors.

Lenders will also ask you for a good faith certification that:

  1. The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
  2. The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments
  3. Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here
  4. From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan)

If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents (final requirements will be announced by the government) such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.

Loan Forgiveness:

The borrower shall have a portion of their loan forgiven in the amount equal to their payroll costs (not including costs for compensation above $100,000 annually), interest payments on mortgages, rent payments, and utility payments between February 15 and June 30, 2020. Loan forgiveness will be reduced if the borrower reduces employment by a ratio similar to their reduction in employment or if borrower reduces salaries and wages by more than 25%.

What if I bring back employees or restore wages? Reductions in employment or wages that occur during the period beginning on February 15, 2020, and ending 30 days after enactment of the CARES Act, (as compared to February 15, 2020) shall not reduce the amount of loan forgiveness IF by June 30, 2020 the borrower eliminates the reduction in employees or reduction in wages.

View the Guide & Checklist

Loan Programs & Credit Facililties

Title IV of the CARES Act provides $500 billion to Treasury’s Exchange Stabilization Fund for loans and loan subsidies and support for Federal Reserve credit facilities to support states, municipalities, and eligible businesses, which include air carriers and U.S. businesses that have not received adequate economic relief in the form of other loans or loan guatantees.

The $500 billion is allocated as follows:

  • $25 billion in loans and loan guarantees for air carriers, air maintenance and ticket agents
  • $4 billion in loans and loan guarantees for cargo air carriers
  • $17 billion in loans and loan guarantees for businesses critical to maintaining national security
  • $454 billion for loans, loan guarantees and investments in support of facilities established by the Federal Reserve to support lending to eligible businesses, states, or municipalities

Loans and Loan Guarantees for Mid-Size Businesses:

The Treasury Secretary will “endeavor to seek implementation” of a Middle Market loan facility for banks to provide loans to businesses and eligible nonprofits with 500 – 10,000 employees.

  • Interest rate will be no more than 2% with no principle or interest paid for the first 6 months.
  • Funds must be used to retain 90% of workforce at full wages and benefits through September 30, 2020 and intends to restore 90% of workforce on hand on February 1, 2020.
  • No buybacks or dividend payments through the life of the loan.
  • No outsourcing or offshoring of jobs for the life of the loan and 2 years thereafter.
  • Recipient will not abrogate collective bargaining for term of the loan and two years. Will also remain neutral in union organizing activities.
  • (NOTE: this could be one of many loan facilities created and no borrower is required to use this particular facility.)

Business Tax Provisions

Employee Retention Credit

The CARES Act provides eligible employers – including tax-exempt organizations but not governmental entities – a refundable credit against payroll tax (Social Security and Railroad Retirement) liability equal to 50% of the first $10,000 in wages per employee (including the value of health plan benefits).

Delay of Employer Payroll Taxes 

The CARES Act postpones the due date for depositing employer payroll taxes (defer payment of the employer share of the Social Security tax due between now and January 1, 2021 to December 31, 2021 (50% due) and December 31, 2020 (remaining due).

Treatment of Losses 

Certain changes to the loss provisions made by the Tax Cuts and Jobs Act (TCJA) are suspended in an effort to allow companies to utilize greater losses as well as to claim refunds for certain losses. Modifications for net operating losses (for 2018, 2019, 2020, loss can be carried back 5 years, temporarily suspends 80% limitation; extends to pass-throughs, sole proprietors).

Corporate AMT Credits 

Accelerates ability of companies to recover AMT credits.

Limitation on Business Interest Expense

Modification of limitation on business interest (for 2019, 2020, increases 30% limitation to 50%).

Excise Tax Exemption for Hand Santizer 

Temporary exception from excise tax for alcohol used to produce hand sanitizer (for 2020).

Pensions and Employee Benefit Requirements 

  • Allow the Department of Labor to delay employee benefit related deadlines because of a public health emergency the same as declared national disasters or terroristic military actions.
  • Delay any required minimum pension contributions due in 2020 until January 1, 2021 (plus interest),
  • For benefit restrictions, allow a plan sponsor to use the adjusted funding target attainment percentage for the last plan year ending before January 1, 2020 for plan years including calendar year 2020

Banking Relief, Mortgage Forbearance, & Credit Reporting

  • Regulatory relief from accounting standards for loan modifications related to COVID19 made by banks.
  • Temporary relief from CECL standards.
  • During the covered period, a borrower with a Federally backed mortgage loan experiencing a financial hardship due, directly or indirectly, to the COVID–19 emergency may request forbearance on the Federally backed mortgage loan, regardless of delinquency status.
    • Covered period is 60 days (2 months) and allowable extensions of up to 4 periods of 30 days each (4 months).
  • Requires that furnishers to credit reporting agencies who agree to account forbearance, or agree to modified payments with respect to an obligation or account of a consumer that has been impacted by COVID-19, report such obligation or 6 account as “current” or as the status reported prior to the accommodation during the period of accommodation unless the consumer becomes current.
    • Applies only to accounts for which the consumer has fulfilled requirements pursuant to the forbearance or modified payment agreement.
    • Such credit protection is available beginning January 31, 2020 and ends at the later of 120 days after enactment or 120 days after the date the national emergency declaration related to the coronavirus is terminated.

Payments & Relief for Individuals 

  • Direct payments to taxpayers equal to $1,200 per individual ($2,400 joint return) plus $500 per child.
  • Phased out for incomes above $75,000 ($150,000 joint).
  • Penalty-free COVID-19-related distributions up to $100,000 and loan amount increases and modifications to individuals from tax-favored retirement plans.
  • Waiver of required minimum distributions from retirement plans and IRAs for 2020.
  • Tax exclusion for people who are receiving student loan repayment from their employer.

Health Care Provisions  

  • Repeals the requirement that over-the-counter medical and health items previously deemed to be qualified medical expenses must be prescribed by a physician in order for tax preferred funds to be used when purchasing them.
  • Provides $75 billion to ensure healthcare providers continue to receive the support they need for COVID-19 related expenses and lost revenue.
  • Builds on new coverage requirements for diagnostic and testing of COVID 19 for private plans by broadening the testing that would be covered without cost-sharing beyond FDA-approved testing to include 1) tests provided by clinical labs on an emergency basis (including public health labs); and 2) state-developed labs.
  • Requires all comprehensive private health insurance plans reimburse the test provider based on the rate negotiated between the plan and the provider (i.e., the in-network rate). If there is no negotiated rate between the plan and provider (i.e., the provider is out-of-network), the plan would fully reimburse the provider based 9 on the provider’s own “cash price” which must be publicly available (listed on a public website). Providers who fail to make their price public could face a civil monetary penalty of up to $300 per day from the Department of Health and Human Services.
  • Ensures that access to testing and a coronavirus vaccine (once one is developed) would be quickly covered without cost-sharing on a permanent basis as a preventive service.
  • Ensures that uninsured individuals can receive a COVID-19 test and related service with no cost-sharing in any state Medicaid program that elects to offer such enrollment option.
  • Ensures that states are able to receive the Medicaid 6.2% FMAP increase.

Student Loans

  • Requires the Secretary of Education to defer student loan payments, principal, and interest thought September 30, 2020 without borrower penalty.
  • Suspends reporting to credit agencies.
  • Suspends all involuntary collection on defaulted student loans, including wage garnishment and reduction in tax refunds or other government-provided benefits.

Airline Industry Support 

  • Provides $32 billion in grants to airline industry (air passenger, cargo, and contractors) exclusively to support employee wages and benefits.
  • The government may take warrants, debt securities, or other instruments as compensation.

State & Local Aid 

  • Provides $150 billion to states and local government based on each state’s population for the purpose of funding unforeseen expenses related to COVID-19.


Provides $340 billion in new federal spending for Fiscal Year 2020 – 80% of which goes to state and local governments and communities and includes:

  • $20.5 million for the USDA Rural Business Cooperative Service – the legislation provides $1 billion in lending authority available for the Business and Industry loan guarantee program, which provides financing to business owners that might not be able to qualify for a loan on their own.
  • $80 million for the Food and Drug Administration – the legislation provides additional funding to support the development of necessary medical countermeasures and vaccines, advance domestic manufacturing for medical products, and monitor medial product supply chains.
  • $1.5 billion for the Economic Development Administration – funding to support economic development grants for states and communities suffering economic injury as a result of the coronavirus.
  • $50 million for the Manufacturing Extension Partnership (MEP) – funding included to be distributed among the 51 MEP centers to help small and medium sized manufacturers recover from the economic impacts of the coronavirus
  • $6 million for the National Institute of Standards and Technology – funding to support continuity of operations during the coronavirus pandemic, including research and measurement science activities to improve coronavirus testing capabilities and support development of coronavirus diagnostics
  • $10 million for the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIMBL) – funding for NIMBL to improve national readiness and domestic biopharmaceutical manufacturing capability.
  • $60 million for the National Aeronautical and Space Agency (NASA) – funding to support NASA with resources for operational adjustments associated with mission delays caused by NASA center closures related to the coronavirus pandemic.
  • $2.45 billion for the Defense Industrial Base – additional funding for the Defense Working Capital Funds as the military services work to mitigate the impact of the coronavirus on production lines, supply chain, military depots, and labs. Additionally, funds will go to the Defense Production Act to increase access to materials necessary for national security and recovery from the pandemic.
  • $70 million for the U.S. Army Corps of Engineers – additional funding to support Emergency Operations Centers to ensure the continuous operation of Corps projects across the country related to coronavirus prevention.
  • $562 million for the Small Business Administration (SBA) – additional funding for administrative expenses and program subsidy for the SBA’s Disaster Loans Program.
  • $9.1 million for the Cybersecurity and Infrastructure Agency – funding to address immediate needs for improved interagency coordination for the protection of critical infrastructure worldwide.
  • $45 billion for the Federal Emergency Management Administration (FEMA) – funding to continue FEMA’s entire suite of response and recovery activities and reimbursements provided to states and localities nationwide by the Disaster Relief Fund.
  • $453 million for the Bureau of Indian Affairs – funding for the coronavirus containment and detention facilities and aid to tribal governments.
  • $7.2 million for the Environmental Protection Agency (EPA) – funding to support research efforts regarding coronavirus and associate costs with cleaning and disinfecting Agency facilities.
  • $1 billion for the Indian Health Service – funding to address critical response needs in Indian country including medical equipment and medical supplies to fight the coronavirus.
  • $127 billion for the Public Health and Social Services Emergency Fund – funding included for reimbursement to hospitals and healthcare providers so that they may continue to receive the support they need for coronavirus related expenses and lost revenue.
  • $4.3 billion for the Centers for Disease Control (CDC) – funding for public health preparedness and response which includes direct funding to state and local public health responders as well as State and Local Preparedness Grants.
  • $945.5 million for the National Institute of Health (NIH) – funding for vaccines, therapeutic, and diagnostic research to increase our understanding of the coronavirus and underlying risks.
  • $30.9 billion for the Department of Education – funding for the Education Stabilization Fund and Elementary and Secondary Education in formula funding directly to the states to help schools respond to coronavirus and related school closures.
  • $19.6 billion for the Department of Veterans Affairs (VA) – funding for Medical Services and Medical Facilities to support the increased demand for healthcare services at the VA.
  • $353 million for the United States Agency for International Development (USAID) – funding to bolster the response to coronavirus domestically and abroad including support for the cost of evacuating personnel abroad.
  • $31.1 billion for the Department of Transportation (DOT) – funding included for the Federal Aviation Administration, Airport Improvement Program, Essential Air Service, Federal Highway Administration, Federal Transit Administration Transit Infrastructure Grants, and Amtrak.
  • $900 million for Low Income Home Energy Assistance (LIHEAP) – grants to states to support immediate home energy assistance for low-income households affected by coronavirus.
Read The Summary of Bipartisan Agreement on “CARES” Act

CARES Act Webinars