What businesses need to know about the federal stimulus package

On March 27, President Donald Trump signed into law the Coronavirus Aid, Relief and Economic Security (CARES) Act, a $2 trillion stimulus package. This is the third congressional measure passed in just two weeks to ease the economic impact of COVID-19 on American workers and businesses. This bill provides extensive relief to individuals and businesses. While the bill includes a wide array of provisions — more than can be summed up here — we want to highlight a few key provisions.

CARES Act relief for individuals

Direct cash payments. Payments are income-qualified, based on either the 2019 tax return (if filed) or the 2018 return. This is a one-time payment of $1,200 to most individuals earning less than $75,000 per year. Married couples each will receive a payment, and families will receive an additional $500 per child. That means a family of four earning less than $150,000 can expect $3,400.

Payments are on a sliding scale after that, with the end point being individuals making more than $99,000 and couples making more than $198,000.

The administration has said they intend to get these payments out by early April and has indicated that most will be made through direct deposit.

Expanded unemployment benefits. The federal stimulus package enables $600 in additional weekly unemployment insurance payments to supplement the payment an individual is receiving from the state. This enhanced payment lasts for four months.

The package also includes a new, temporary unemployment program for self-employed, freelancers and independent contractors.

Temporary student loan relief. All loan and interest payments for all federally owned student loans will be deferred through Sept. 30 without penalty to the borrower.

CARES Act relief for small businesses

The federal stimulus package also includes loans and grants to small businesses, including $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.

The stimulus package allocates $350 billion to the Small Business Administration to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll, keep workers on the books or pay for rent, mortgage and existing debt could be forgiven, provided workers stay employed through the end of June.

For small businesses already using SBA loans, the stimulus includes an additional $17 billion to cover six months of payments for small businesses.

The bill defines “small businesses” as those with fewer than 500 workers. An exception was made for restaurants, food service companies, caterers and hotels in order to base the employee count on the number of employees at each physical location. These types of businesses with more than 500 employees over multiple properties would qualify for the loans.

CARES Act relief for all businesses

The stimulus package also includes a fully refundable tax credit to help closed or distressed businesses keep workers on the payroll either by rehiring or by using paid furloughs. The credit covers 50% of payroll on the first $10,000 of compensation, including health benefits, for each employee. For employers with more than 100 full-time employees, the credit is for wages paid to employees when they are not providing services because of the coronavirus. Eligible employers with 100 or fewer full-time employees could use the deduction even if they aren't closed. The credit covers:

  • Five-year net operating loss (NOL) carryback.
  • Delayed payment of employer payroll taxes.
  • Employee retention tax credit.
  • $130 billion for hospitals and community health centers.
  • Direct financial help to airlines and other hard-hit industries.

In addition, the bill contains significant relief for hospitals and other health care providers; funding for development of tests, vaccines and treatments; relief for large industries such as airlines; enhanced funding for safety net providers and schools; funding for state and local governments; and numerous other provisions under all headings.

For more detailed information, browse the resources provided below.

Download the guide to the CARES act

Read the U.S. Chamber of Commerce’s “Emergency Loans: Guide and Checklist for Small businesses.”

Read the bill (contains full legislative text, with the appropriations package beginning on page 609).

View key CARES Act documents from the bill, including comprehensive summaries from Republicans and Democrats.

Access the links to these documents and summaries of each below:

House Republican Committee Appropriation Highlights and Detailed Funding Summary: Coronavirus Relief

  • Funding and appropriation highlights from the House Republican Committee that provide a granular breakdown of where federal relief funds will be spent to curb. COVID-19’s negative economic impact.

Economic Stabilization and Assistance to Severely Distressed Sectors of The United States Economy: Banking Title Summary

  • Key provisions of the US Senate’s coronavirus aid legislation that “provides financial assistance to states, municipalities, and businesses, and provides important help to homeowners and renters by placing moratoriums on foreclosures and evictions. “

C3 Summary: Fighting the COVID-19 Public Health Crisis and Putting “Workers First

  • Breakdown of benefits of the new stronger worker protections, including a Marshall Plan for our hospitals under the CARES Act.

COVID 3: Unemployment Insurance and Tax Provisions

  • Explains the key Disaster Unemployment Assistance and CARES Act provisions for individuals, families, and businesses across the US.

E&C Republicans: Summary of CARES (Phase 3 COVID-19 Response)

  • Explains energy and commerce-related relief provisions for the following industries: telehealth, energy, environmental and climate change, public health, and health care.

Committee on Education and Labor Republicans: Education and Labor Provisions

  • Offers a deeper look at some of the Education and Labor Committee-related provisions included in the CARES Act.

Finance Health: Section by Section

  • A section-by-section breakdown of the Finance Committee’s CARES Act-related provisions.
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