Key Provisions in the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act")

Employers: Call to Action, Contact SBA (Small Business Administration) and Initiate Application ASAP

Download the PDF summary here.

SBA Economic Injury Disaster Loan (EIDL) Grants to Small Businesses

How does it work?

  • Provides Economic Injury Disaster Loan (EIDL) Grants to small businesses (defined as 500 or fewer employees) and nonprofit 501c(3) organizations
  • The program is retroactive to February 15, 2020, to help bring workers back to payroll who have been laid off; EIDL Loan Program and Grants available through the SBA
  • EIDL applicants can request an advance of not more than $10,000 which SBA is required to distribute within days after the Administrator receives the application
  • Advance payment may be used for employee paid sick leave payroll, increased costs to obtain materials, rent or mortgage payments, and repay obligations that cannot be met due to revenue losses; applicants are not required to repay advance payments, even if subsequently denied for an EIDL loan
  • Loan period is February 15, 2020 – June 30, 2020
  • Term: 3.75% for small businesses, 2.75% for nonprofits, with terms of up to 30 years
  • Waived: for loans before December 31, 2020; waives personal guarantee on advances and loans below $200,000, the requirement to have been in business for one year before the disaster, and the credit elsewhere requirement

The loan can pay for:

  • Providing paid sick leave to employees unable to work due to the direct effect of the COVID-19;
  • Maintaining payroll to retain employees during business disruptions or substantial slowdowns;
  • Meeting increased costs to obtain materials unavailable from the applicant's original source due to interrupted supply chains;
  • Making rent or mortgage payments; and
  • Repaying obligations that cannot be met due to revenue losses.

Limitation on Paid Leave

(Amends Leave Provisions in Families First Coronavirus Response Act)

  • Employer is not required to pay more than $200 per day and $10,000 in the aggregate for each employee under the FMLA, for the purpose taking care of a child due to school closure or if childcare is not available
  • Employer is not required to pay more than $511 per day and $5,110 in the aggregate for sick leave or more than $200 per day and $2,000 in the aggregate to care for a quarantined individual or child for each employee under the Emergency Paid Sick Leave Act
  • Note: The Families First Coronavirus Response Act: Employers are entitled to an advanceable, refundable tax credit equal to the amount of the paid emergency sick and family leave to fully offset the cost of the paid leave, up to 12 weeks total paid–sick (2 weeks) and family leave (10 weeks), with the intent to quickly provide a dollar-for-dollar tax offset against federal payroll taxes

Paid Leave for Rehired Employees

(Amends Leave Provisions in Families First Coronavirus Response Act)

  • Allows an employee who was laid off by an employer March 1, 2020, or later to have access to paid family and medical leave in certain instances if they are rehired by the employer
  • Employee would have had to work for the employer at least 30 days

Paycheck Protection Program (PPP)

(Note: Loans available through SBA and Treasury-approved banks, credit unions, and some nonbank lenders)

Loan Amount:

  • Loan amount must be lesser of: $10,000,000 or 250% of the borrower’s average monthly payroll cost for the preceding year (two and a half months payroll; provisions for seasonal employers are included) plus the amount of any existing Section 7(b)(2) disaster loans eligible for refinancing
  • “Credit elsewhere” and collateral requirements waived
  • Requires eligible borrowers to make good faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19

Loan Forgiveness:

  • Loans eligible for forgiveness equal to the amount spent by the borrower during an eight-week period after the origination date of the loan on payroll costs, interest payment on any mortgage incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020
  • To encourage employers to rehire any employees who have already been laid off due to the COVID-19 crisis, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period
  • Canceled indebtedness will not be included in the borrower’s taxable income


Employee Retention Credit (Available only to non-PPP loan recipients)

  • Refundable payroll tax credit available for 50% of wages paid by employers to employees during the COVID-19 crisis for employers whose (1) operations were fully or partially suspended due to a COVID-19-related shutdown order, or (2) gross receipts decline by more than 50% when compared to the same quarter in the prior year — PERIOD: March 13, 2020 through December 31, 2020; available for the first $10,000 of compensation per employee, including health benefits

Delay of Payment of Employer Payroll Taxes and Tax Filing

  • Employers and self-employed individuals may defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government; deferred employment tax may be paid over the following two years, with half of the amount required to be paid by December 31, 2021, and the other half by December 31, 2022 — Federal 2019 tax filing and payment deadline is extended from April 15, 2020 to July 15, 2020; same for most states

Modifications for Net Operating Losses (NOLs)

  • Provides that an NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years; temporarily removes the taxable income limitation to allow an NOL to fully offset income

Modification of Limitation on Business Interest

  • Temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the limitation from 30% to 50% of taxable income (with adjustments) for 2019 and 2020

Technical Amendment Regarding Qualified Improvement Property

  • Enables businesses to write off immediately costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building

Advance Refunding of Credits

  • Allows employers to receive an advance tax credit from the US Treasury instead of having to be reimbursed

Employees: Call to Action, Work With Current or Former Employer to Tap CARES Act Job Retention Options

2020 Recovery Rebates for Individuals

  • All U.S. residents with adjusted gross income up to $75,000 ($150,000 married), who are not a dependent of another taxpayer and have a work-eligible social security number, are eligible for the full $1,200 ($2,400 married) rebate; they are also eligible for an additional $500 per child
  • For the vast majority of Americans, no action on their part will be required in order to receive a rebate check as IRS will use a taxpayer’s 2019 tax return if filed, or in the alternative, their 2018 return. This includes many low-income individuals who file a tax return in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit
  • The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased-out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child, and $198,000 for joint filers with children

Special Rules for Use of Retirement Funds

  • Waives the 10% early withdrawal penalty for distributions up to $100,000 from qualified retirement accounts for COVID-19-related purposes made on or after January 1, 2020
  • Income attributable to such distributions would be subject to tax over three years, and the taxpayer may recontribute the funds to an eligible retirement plan within three years without regard to that year’s cap on contributions and provides flexibility for loans from certain retirement plans for coronavirus-related relief

Coverage of Diagnostic Testing, Preventive Services, and Vaccines for COVID-19

  • Clarifies that all testing and future potential vaccines for COVID-19 are to be covered by private insurance plans without cost-sharing, including those tests without an Emergency Use Authorization by the FDA

Independent Contractors: Call to Action, Contact State or Local Unemployment Office and Apply for Enhanced Unemployment Benefits

Pandemic Unemployment Assistance (PUA)

  • Emergency increase in unemployment compensation benefits through December 31, 2020 — provides payment through 3/27/2020 to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others) who are unable to work as a direct result of the COVID-19 crisis
  • Provides an additional $600 per week payment to each recipient of unemployment insurance or PUA for up to four months
  • Provides an additional 13 weeks of unemployment benefits through December 31, 2020, to help those who remain unemployed after weeks of state unemployment benefits are no longer available

Additional Provisions for Independent Contractors:

Emergency Economic Injury Disaster Loans (EIDL) Grants

  • EIDL: Expands eligibility for access to include any individual operating as a sole proprietor or an independent contractor during the covered period (January 31, 2020 to December 31, 2020)

Paycheck Protection Program (PPP)

  • PPP: Includes sole-proprietors, independent contractors, and other self-employed individuals as eligible for loans

Family and Medical Leave Provisions

Additional Information

Small Business Administration Helpful Links:

Emergency Sick and Family Leave Program

Treasury and IRS Guidance on Deferring Tax Filing, Payments and Compliance Action

Unemployment Benefit Expanded to Cover COVID-19 Related Worker Displacement

Managed at the state level. Members should consult their state department of labor for details:

NAMM is monitoring and providing members with information about COVID-19, including guidance from the World Health Organization, the Centers for Disease Control (“CDC”), and federal, state, and local government authorities and health officials; this information continues to change. As a service to its members, NAMM seeks to provide information that is helpful, accurate and up to date to the best of its knowledge. Information presented is not professional medical, legal or financial advice. NAMM members are encouraged to contact their professional advisors, as needed and desired, to plan and take action based on information provided.

For more information, please visit our COVID-19 Resource page.