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Thought Leadership in Action

Category: Financial Industry

Everything You Need to Know About the COVID-19 CARES Act

On Wednesday, March 25, 2020, the U.S. Senate passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, delivering a massive influx of cash for individual Americans, businesses and health care facilities reeling from the COVID-19 pandemic. The $2 trillion bill is the largest in U.S. history and is designed to stimulate the economy during the COVID-19 pandemic.

The long-awaited legislation contains provisions to help individuals, businesses and public agencies weather the pandemic. Maintaining the economy through incentivizing employment is a priority.

Here’s how the CARES Act will impact you and your business.

Financial Assistance for Individuals

An estimated $560 billion of the $2 trillion stimulus package has been set aside for individual economic impact payments. These will be based on income as stated on the individual’s 2019 tax filing (or 2018 for those who haven’t filed this year yet). Citizens making less than $75,000 per year qualify for up to $1200. Married couples filing jointly and making less than $150,000 qualify for $2400. An additional $500 will be allocated per child. Payments are reduced by $5 for every $100 earned above the $75,000/$150,000 threshold, with a cap of $99,000/$198,000.

Checks will be distributed via direct deposit information from filers’ 2018 or 2019 taxes. The Treasury is currently developing a portal for individuals to add or update their direct deposit information. Those without direct deposit will receive their checks by mail, but it will take longer. Individuals who don’t usually file (e.g., senior citizens or disability recipients) are still eligible to receive a stimulus check. Further guidance will be forthcoming here.

Aid for Businesses

This bill encourages employers to maintain and compensate employees throughout the COVID-19 crisis. Up to $377 billion has been allocated for small business assistance. Any business or nonprofit with less than 500 employees qualifies for up to $1 million in SBA Express loans (up from $350,000 under normal circumstances). 

Under the CARES Act’s Paycheck Protection Program, funds used to cover operating costs such as payroll, debt payments and additional wages for tipped employees will be forgiven as long as employees are maintained on the payroll. Businesses that do lay off employees, however, will be penalized and have to pay back the amount that would have been incurred by maintaining those employees.

Large corporations are slated to receive $500 billion in stimulus money. However, these corporations are required to pay back any assistance received. The funds received must be publicly disclosed, and they are subject to further oversight.

Relief for Public Agencies

The bill also includes financial assistance for public agencies. Public healthcare will receive $153.5 billion. That money will be used to support hospitals and community health centers, provide health care for veterans, and cover the costs of ventilators, masks and other medical supplies. A small portion of the stimulus package ($26 billion) is allocated to support child nutrition through school meal plans, food stamps and food banks to help ensure that people have access to healthy food.

State and local governments will receive $339.8 billion to help support local COVID-19 response efforts. These funds will be parsed out to support local schools and colleges and to fund programs designed to assist children and families. An estimated $43.7 billion has been allocated for education and other programs. These include deferred student loan payments through September 30, 2020, and support for students via extended limits on Pell Grants and work-study funds.

See the full breakdown here.


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