The USA Senate passed an amended version of H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” or “Bill”), a “Phase III” coronavirus economic stimulus package but there is not yet clarity on the timing of the path forward for the Bill in the House.
The CARES Act would have the widest ranging impact to six main groups: individuals, small businesses, big corporations, hospitals and public health, federal safety net, state and local governments, and education.
If the CARES Act becomes law the main features for small businesses are emergency grants and a forgivable loan program for companies with 500 or fewer employees. There are also changes to rules for expenses and deductions meant to make it easier for companies to keep employees on the payroll and stay open in the near-term.
Forgivable loans: There is $350 billion allocated for 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.
Tax credit: The bill establishes a fully refundable tax credit for businesses of all sizes that are closed or distressed to help them keep workers on the payroll. The goal is to get those employees hired back or put on paid furlough to make sure they have jobs to return to. The credit covers up to 50 percent 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.
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