The CARES Act
The Coronavirus Aid, Relief, and Economic Security Act (CARES) has now been signed into law on Friday, March 27, 2020. The CARES Act has many facets to benefit businesses and individuals.
This Act created a new Small Business Administration loan that provides money with the attractive feature that the amount borrowed may be forgiven based on borrower businesses retaining their workforce levels among other things. Guarantees and collateral are not required for these loans which are available to businesses and non-profits with 500 employees or less. Sole proprietors, Independent Contractors, and self-employed individuals are also eligible. The available amount of money under this program is the lesser of $10 million or 2.5 times the average monthly payroll costs incurred within the year prior to the loan.
Under the CARES Act the Emergency Government Disaster Loan and Grant is expanded to include businesses with fewer than 500 employees, sole proprietors, and employee stock ownership plans. No personal guarantee is required for loans made within this program by December 31, 2020. A new Emergency Grant has also been created to allow for immediate relief up to $10,000. There is no requirement for the grant to be repaid. Due to the demand, applications for this relief should be made as soon as possible.
The CARES Act also provides the much-discussed stimulus or rebate to individuals earning less than $75,000 and couples earning less than $150,000 based on the tax return of 2018 or 2019 – depending on which is filed. Additional funds are available for households with dependent children. Individuals and couples may be phased out depending on their adjusted gross income. It should also be noted that funds received under this Act will count as a credit towards the 2020 tax filing.
Below are links to insightful articles that break down the details of the act, including but not limited to the Emergency Grant, Paycheck Protection Program, and the individual relief checks, and provide examples of the Act’s implications. If you have questions regarding the tax implications of the CARES Act, we recommend speaking with your accountant, or contact our office for a referral. You are encouraged to contact your local bank to learn about initiating the lending process.
Individuals and Businesses:
National Law Review https://www.natlawreview.com/article/summary-cares-act