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

Last week the U.S. Senate passed the historic $2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act to provide relief to the struggling American economy. As the largest economic bill in U.S. history, there are obviously many parts and pieces to understand. Using information from the U.S. Senate Committee of Small Business & Entrepreneurship, we have broken the bill down into the following categories:
  • Paycheck Protection Program (PPP) Loans
  • Small Business Debt Relief Program
  • Economic Injury Disaster Loans & Emergency Economic Injury Grants
  • Small Business Tax Provisions

Read the entire guide here.

Paycheck Protection Program (PPP) Loans

The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy snap-back quicker after the crisis.

Who is eligible? 

  • Businesses and 501(c)(3)s with less than 500 employees.
  • Physician practices are eligible, no matter how they are structured.

What can you use the loan amount for? 

  • Payroll costs – Group health care benefits.
  • Employee salaries – Interest on any mortgage obligation.
  • Rent.
  • Utilities.
  • And any other debt obligations occurred before Feb. 15, 2020.

Read more about PPP loans from the U.S. Senate here.

Small Business Debt Relief Program

This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.

Find out if you’re eligible and how to apply here.

Economic Injury Disaster Loans & Emergency Economic Injury Grants

These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.

Who is eligible for an EIDL?

Those eligible are the following with 500 or fewer employees:

  • Sole proprietorships, with or without employees
  • Independent contractors
  • Cooperatives and employee owned businesses
  • Tribal small businesses

Small business concerns and small agricultural cooperatives that meet the applicable size standard for SBA are also eligible, as well as most private non-profits of any size.

What is an EIDL and what is it used for?

EIDLs are lower interest loans of up to $2 million, with principal and interest deferment at the Administrator’s discretion, that are available to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.

Read more about EIDLs from the U.S. Senate here.

Small Business Tax Provisions

Two tax programs are available for businesses impacted by COVID-19:
  • Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship
  • Delay of Payment of Employer Payroll Taxes

Please not that employers receiving assistance through the Paycheck Protection Program are not eligible for these tax provisions. Learn more here.

Additional Reading

Here are some more great summaries about this complex act:

CARES Act: Update for Small Businesses from the Michigan Chamber of Commerce

Summary of the Coronavirus Aid, Relief and Economic Security Act from Warner Norcorss + Judd

CARES Act Summary from the Great Lakes Metro Chambers Coalition

FAQ on Small Business Loans from the House Republican Conference

What’s Inside The Senate’s $2 Trillion Coronavirus Aid Package from NPR

Summary of CARES Act from the National Law Review