Coronavirus Aid, Relief, and Economic Security (CARES) Act
Last week Friday, the President signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. You can find an updated version of the bill here.
Key provisions and resources for businesses in the CARES Act:
Economic Injury Disaster Loans:
- Small businesses can apply for Economic Injury Disaster Loans (EIDL)s. The CARES Act expands this loan program to include $10,000 emergency grants for employers for business costs such as maintaining payroll and paying mortgages.
- The Small Business Administration (SBA) has released a 3-Step Process for applying, which can be found here.
- Small businesses can apply for the Economic Injury Disaster Program here.
Payroll Protection Program:
- Small businesses can also apply for the Payroll Protection Program. This program allows employers to borrow 2.5 times their average monthly payroll (based on the applicable look back option the employer chooses). Employers can borrow a maximum of $10 million.
- This program allows for the payroll portion of the loan to be forgiven if the employer maintains their employee count and employees’ salaries.
- Interested small businesses should check with their bank for lending options under this program.
- The SBA will also likely have additional information about this program, including participating lenders here in the days to come.
- More information on this program can be found here.
Employee Retention Tax Credit:
- Qualified employers who are not taking advantage of the Payroll Protection Program can take advantage of the employee retention tax credit.
- Employers can claim up to 50% of their employees’ wages during the time period of March 13, 2020, through December 31, 2020, with a cap of $10,000 in qualified wages per employee.
- Employers can receive a max tax credit of $5,000 per employee.
- Qualified employers are employers who were in business during 2020 and 1) have been fully or partially suspended due to COVID-19, or 2) have seen a 50% reduction in gross receipts compared to the same quarter last year.
- Employers who are receiving tax credits for wages paid under the FFCRA (see below) may not also take advantage of this tax credit for those wages already covered by the FFCRA’s tax credit.
Families First Coronavirus Response Act (FFCRA) The Department of Labor (DOL) has provided additional guidance for employers on the new federal paid sick leave and emergency family medical leave which goes into effect on April 1, 2020. The additional guidance can be found here.
Some key highlights from the additional guidance:
- Employers who have laid off or furloughed employees do not have to pay paid sick leave or emergency FMLA.
- Emergency paid sick leave and emergency FMLA can be taken intermittently under certain circumstances.
- Employers with less than 50 employees may be able to qualify for an exemption* from the emergency paid FMLA if an authorized officer of the business has determined that:
- The provision of paid sick leave or expanded family and medical leave would result in the small business’s expenses and financial obligations exceeding available business revenues and cause the small business to cease operating at a minimal capacity;
- The absence of the employee or employees requesting paid sick leave or expanded family and medical leave would entail a substantial risk to the financial health or operational capabilities of the small business because of their specialized skills, knowledge of the business, or responsibilities; or
- There are not sufficient workers who are able, willing, and qualified, and who will be available at the time and place needed, to perform the labor or services provided by the employee or employees requesting paid sick leave or expanded family and medical leave, and these labor or services are needed for the small business to operate at a minimal capacity.
*The Internal Revenue Service has not released the exemption application form yet for employers.