COVID-19 CARES Act Simplified: 5 Things to Know

Business meeting between two people with one man pointing at a chart on a tablet

Relief for Americans and businesses struggling during the COVID-19 pandemic has arrived. In March 2020, President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES act primary goal is to provide relief for individuals, healthcare workers, small businesses, and certain industries most affected by the pandemic. The $2 trillion stimulus bill amends the Small Business Act (SBA) to create a new Business Loan Program category. For the period from February 15to June 30, 2020 (covered period), the law allows the Small Business Administration (Administration) to provide 100% federally-backed loans up to a maximum amount to eligible businesses to help pay operational costs like payroll, rent, health benefits, insurance premiums, utilities, etc. Subject to certain conditions, loan amounts are forgivable.

Here are 5 key takeaways for small businesses and individuals (and how to identify if you qualify for relief):

1. Paycheck Protection Program (PPP)

The CARES Act creates a $349 billion loan program for small businesses, including 501(c)(3) non-profits and physician practices. These loans can be forgiven through a process that incentivizes companies to retain employees. Eligible recipients will have access to the PPP starting April 3rd. The PPP will be administered by SBA and implemented by banks across the U.S. The funds are distributed on a first-come, first-serve basis.

How do you know if you qualify?

  • Small businesses and Nonprofits organized as 501(c)(3)s with fewer than 500. Sole proprietors are also eligible.
  • Loans will be used for salaries and other payroll expenses, rent and utilities, mortgage interest and interest on other debt secured before February 15, 2020.
  • Loan amounts are limited to 2.5 times monthly payroll expenses for full-time employees only, up to $10 million and salaries are capped at $100,000 per employee.

2. Expanded Emergency IDL Grants

$10 billion has been allocated to expand eligibility to include tribal businesses and cooperatives, as well as employee stock ownership plans with less than 500 employees. Individual or sole proprietors have also been granted access to this program. An option for a $10,000 cash advance that does not have to be paid back has been added even if the borrower’s application is subsequently denied. The advance may be used for certain qualified expenses.

How do you know if you qualify?

  • The advance must be used to provide sick leave to employees who are unable to work due to COVID-19
  • Use the advance to maintain employees on payroll during business slowdowns or disruptions
  • Pay increased costs to procure supplies due to supply chain disruptions
  • Use the advance to pay rent or mortgage payments
  • Repay obligations that cannot be met due to loss of revenue directly resulting from COVID-19

3. Enhanced Unemployment Insurance

The CARES Act provides expanded unemployment insurance provisions to help cover individuals who have become unemployed or under-employed as a result of the pandemic. The CARES Act adds $600 for four months to the unemployment benefit determined under existing state laws and will be made available without any waiting period for the individual. If an individual is still unemployed after state benefits run out, the federal government will provide 13 additional weeks of unemployment insurance through December 31, 2020.

How do you know if you qualify?

  • The individual has been diagnosed with COVID-19 or seeing diagnosis and is, therefore, unable to work or the individual is under quarantine and unable to go to work or a member of the individual’s household has been diagnosed with COVID-19 thus not allowing the individual to work in order to care for the sick household member
  • The individual is unable to work in order to care for a child that is unable to attend school due to school closures as a result of the pandemic and the child is under 18 years of age
  • The individual is unable to get to work or commence new employment because of COVID-19 restrictions or the place of employment has closed as a direct result of COVID-19 or the induvial has quit a job as a direct result of COVID-19
  • The individual has become the main income earner in a household because the head of the household died as a result of COVID-19

4. Recover For Individuals

The CARES Act provides individuals with immediate cash payments totaling $1,200 per individual plus $500 per child. These cash payments are non-taxable, and taxpayers do not need to apply. The relief will automatically be made available to those who qualify.

How do you know if you qualify?

  • Must be a U.S. resident
  • Adjusted Gross Income (AGI) threshold is $150,000 for joint returns, $112,500 for the head of the household, and $75,000 for individual filers (the AGI is based on the 2019 tax year)
  • Phase-out to AGI of $198,000 for joint returns, who will receive a reduced stimulus payment

5. Additional Relief For Small Businesses

The CARES Act also includes $265 million for small businesses to borrow funds in case of challenges directly related to COVID-19.

How do you know if you qualify?

  • The business has experienced disruptions in supply chain that includes delays due to quantity issues, quality issues due to shortages, technology issues such as compromised payment networks
  • Staffing challenges directly resulting from COVID-19
  • A decrease in gross receipts or fewer customers resulting from COVID-19
  • Closure due to COVID-19

Bringing it all together

The CARES Act offers many opportunities for relief in the form of loans for small businesses, sole proprietors, and individuals. Acting now can make an impact on securing your company’s long-term survival and success. For all the latest updates and clarifications made to the CARES Act, please refer to

How Bridgepoint Can Help

We know this is a challenging time and things are changing fast. If you need any guidance on the new loan process, we can help you navigate the many ways the CARES Act can ensure your business continues to thrive during the COVID-19 pandemic. Our team of consultants is ready to support you with our advisory services, please get in touch. Learn more about our full suite of services here.

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