The Team over at GB The Way is following legislation enacted in response to COVID-19 and its effects. We take closer look at the impact of the CARES Act for U.S. Businesses.
President Trump signed the CARES Act into law. This new legislation is aimed at providing $2.2 trillion of relief for individuals and businesses that have been negatively impacted by the coronavirus. This is the third aid package from Congress and is the biggest federal bailout in history. We highlight what it means for all businesses – big and small – and state governments.
ALL BUSINESSES – TAXES
Employers of all sizes that face closure orders or suffer economic hardship due to the coronavirus crisis that continue to pay employees that are furloughed may be eligible for a 50% credit (up to $10,000 per worker) of wages paid to those employees. This is to help workers keep their jobs, help local businesses during this time, and ensure furloughed workers have jobs to return to. Employers also have the option to delay the payment of their 2020 payroll taxes until 2021 and 2022, leading to approximately $300 billion in extra cash flow for businesses.
The CARES Act creates a paycheck protection program for small businesses, self-employed individuals, and gig workers with $350 billion in SBA loans. The program would provide 8 weeks of cash flow assistance through 100% federally guaranteed loans to small businesses who maintain their payroll through the end of June. If the employer maintains payroll, the portion of the loans used for covered payroll, rent, interest on mortgage obligations, and utilities would be forgiven. This program is retroactive to February 15, 2020 to help bring workers who may have already been laid off back onto payrolls. The bill also provides $10 billion for grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs.
The bill sets aside $500 billion in loans for big corporations. These companies will have to pay these back and will be subject to public disclosures and other requirements. The bill creates a special inspector general to oversee the pandemic recovery. That person, along with a special committee, would provide oversight of all loans and other uses of taxpayer dollars. NB: Any company receiving a loan under the program is barred from making stock buybacks for the term of the loan plus one year.
We will continue to follow these developments.