The CARES Act stands at over $2 trillion. It is the biggest supporting package in the history of the USA. It is predicted to make a huge impact on the economic aspect after the pandemic.
Loans and small business still have to be approved by the Treasury or Small Business Administration, and there will be strict conditions and supervision. $150 billion will be given to states which are fighting the virus and another $130 billion will be allocated for the health care system. Here are some of the aspects of the CARES act.
Paycheck Protection Program
$349 billion will be used in order to help small businesses survive and keep their payroll throughout this crisis. The aim is to not have people fired during the pandemic. The Paycheck Protection Program is for all the businesses, nonprofit and veterans organizations, or tribal businesses which employ less than 500 people. The ones with more employees will have to be under the Small Business Administration standard in order to be eligible, or have less than 500 people in one physical location in the case is with food services and accommodation businesses. All those organizations can receive a loan which is up to 2.5 times their average monthly payroll, or no more than $10 million.
With the given money the businesses could pay their employees as well as interest payments, rent, and utilities. Fees are waived, and collateral and personal guarantees are not required. Payments can be deferred from 6 to 12 months with no prepayment penalties.
Additional $10 billion will be given to small businesses, private nonprofits, sole proprietorship, agricultural co-ops, and employee-owned firms, in order to use them as advances for the loans which are forgivable. $17 billion more will be allocated for payments of interest rates and fees on already existing federally guaranteed small business loans for 6 months. $1 billion will be given for administration, training, consulting, and education for loan programs.
The Economic Injury Disaster Loans will now provide $10,000 as emergency relief for the organizations which have suffered from the virus.
These amounts won’t be repaid but will act as more of a grant.
Economic Injury Disaster Loans
Small businesses which have been hit badly by the pandemic will be able to apply for an Economic Injury Disaster Loan Emergency Advance. This is for the funding of $10,000, again not repayable. For this type of advance you can receive no more than $200,000 without having to have a personal guarantee.
Pandemic Unemployment Insurance
The stimulus plan extends both the eligibility and the benefit amounts for unemployment related to the current emergency.
Those benefits are suitable for the individuals who wouldn’t be qualified in case they lose their job because of the crisis. If you are a contractor or self-employed, seeking part-time employment, with insufficient employment history you could apply. If you still are able to continue working from home via the internet, then you are not suitable for these benefits. Almost everyone except for the ones working remotely and the people who are already on paid leave will be eligible.
With this plan the period for unemployment benefits will be increased from 26 weeks to up to 39 weeks for the employees who have suffered. It also includes funding to the first week of unemployment, in case it is not forbidden by state laws. There is also a newly-created Federal Pandemic Unemployment Compensation benefit which gives $600 for every week on top of the normal unemployment benefit.
The Pandemic Emergency Unemployment Compensation has also been launched. It enables those who have no unemployment compensation benefits left to get 13 more weeks of benefits, in case they can work. As for the Pandemic Unemployment Assistance, it grants benefits all those who are self-employed, freelancers, and independent contractors.
The employees who have kept their job, but are now on reduced working hours, the plan covers 100% of state short-term compensation benefits and gives incentives for all of the states to apply such benefits.
Taxes and Credits
The CARES Act includes a tax rebate in the amount of $1,200 for each person and of $500 for every child. The funds are decreased for those individuals who have an income of over $75,000 per year, for heads of households with $112,500, and for the joint filers with $150,000. The Treasury will send these funds as soon as possible.
Taxpayer rebates decrease to 0 if your income is over $99,000 per year for single filers and $198,000 for joint filers.