The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion economic relief package, was passed and signed into law on Friday, March 27, 2020. The CARES Act will provide economic stimulus to individuals, businesses and hospitals in response to COVID-19-related federal and state government actions. This historic federal legislation includes significant public health spending to confront the ongoing pandemic, immediate cash relief for individual citizens, a broad lending program for small business, and targeted assistance for hard-hit industries.

Key provisions of the CARES Act include:

• Paycheck Protection Program - $349 billion loan program, backed by the Small Business Administration (SBA), to help small businesses pay for expenses 
• Loans up to $10 million through approved lenders for: 
• Small employers with 500 or fewer employees, as well as those that meet the current SBA size standards
• Self-employed individuals and "gig economy" individuals
• Certain nonprofits, including 501(c)(3) organizations and 501(c)(19) veteran organizations, and tribal businesses with 500 or fewer employees
• Businesses with more than one location are eligible if they employ 500 or fewer employees per physical location, have under $500 million in gross revenue and fall within the "accommodation and food services" sector under the North American Industry Classification System 
• Funds can be used to pay up to 8 weeks of payroll costs including benefits as well as interest on mortgages, rent, and utilities
• Raises the maximum amount of loan to 2.5x the average total monthly payroll costs, or up to $10 million. Interest rate may not exceed 4% 
• The loan amounts will be forgiven as long as:  
• The loan proceeds are used to cover qualifying costs; and 
• Employee and compensation levels are maintained
• Application can be found here

• Economic Injury Disaster Loans (EIDL) - Expands eligibility to access SBA's existing EIDL program and provides SBA flexibility to process and disperse small dollar loans 
• Expands EIDL program for a covered period of January 31, 2020 to December 31, 2020 and authorizes an additional $10 billion for the program 
• Greatly expands eligibility to include: 
• Businesses with 500 or fewer employees
• Sole proprietorships, with or without employees, and independent contractors 
• Cooperatives, Employee Stock Ownership Plans (ESOPs) or tribal businesses with 500 or fewer employees
• Waives the following existing provisions: 
• Requirement of personal guarantees for loans below $200,000 
• Requirement that an entity have one year in business prior to the disaster 
• Requirement that an applicant be unable to find credit elsewhere 
• Allows EIDL applicants expedited access to capital through Emergency Grant (advance of $10,000 within three days to maintain payroll, provide paid sick leave, and service other debt obligations)

• $529 Billion for Distressed Industries - Economic assistance to distressed industries through loans, loan guarantees, and investment authority
• $454 billion to be used by Treasury, working with the Federal Reserve, for all sectors
• $75 billion for passenger airlines, cargo carriers, and businesses critical to national security

• Federal Tax Relief - Provisions targeted at minimizing the sudden and significant economic impact of companies. Provisions include:
• New employee retention payroll tax credit
• Deferral of employer payroll tax
• Relaxation of limitations on company use of net operating losses
• Modification of loss limitation applicable to pass-through businesses and sole proprietors
• Acceleration of company ability to recover alternative minimum tax credits by allowing companies to claim a refund now and obtain additional cash flow
• Temporary allowance increase of interest expense tax return deductions from 30-percent limitation to 50-percent of taxable income for 2019 and 2020
• Ability of businesses, especially in hospitality, to immediately write off facility improvement costs, instead of having to depreciate improvements over the 39-year life of building

The CARES Act provides critical financial assistance to qualified industries and businesses impacted by the COVID-19 crisis. Selecting from the menu of options under the CARES Act will vary for each business, and will require a careful evaluation to ensure the right decision is made due to the complex nature of the legislation. 

Stearns Weaver Miller has established a statewide, multidisciplinary group working collaboratively to help you navigate the new federal program created by the CARES Act. Please email our team with questions regarding your specific situation.