Every small business person should plan to become conversant with the contents of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The Act is perhaps the largest in funds and most comprehensive in scope business stimulus act ever passed by Congress. It is likely that every small business will be at least in some way touched by the Act’s various provisions.
The CARES Act, passed by Congress as a $2 billion measure, and signed into law by President Trump on March 27, 2020, is referred to as Phase 3 of Congress’s coronavirus response. Phase 1 was an $8.3 billion bill spurring coronavirus vaccine research and development. The second phase was “an approximately $104 Billion package largely focused on paid sick leave and unemployment benefits for workers and families.”
Among the most widely applicable provisions of the CARES Act are the following:
- Provide $145 million in grants over a five year period for promoting telehealth. It is worth noting that telehealth has rapidly become a vital part of primary (and even some specialty) health, as necessitated by limitation of the usual options for protocols employed in health care treatment.
- Create a $669 billion Paycheck Protection Program (PPP) for small businesses, which are defined as those with 500 or fewer employees. These loans are designed to provide limited, but important protection for the jobs of workers who would otherwise be forced to be furloughed or discharged by their employers.
- Expansion of the Small Business Administration’s Economic Injury Disaster Loans (EIDL) program for loans of up to $25,000 if unsecured and up to $2 million loans that are for up to 30 years and bear low-interest rates.
- Deferment for up to two years for the employers’ portion of social security tax. The deferment also applies to the portion of self-employment tax corresponding to the employers’ share of social security tax.
- A refundable employee retention tax credit for employers whose operations were suspended due to COVID-19.
- Increase the deduction for net operating losses.
- Increase deductions for corporate charitable contributions.
- $1,200 for each individual and $2,400 for each married couple filing jointly, which payments will be non-taxable income. Additional payments will be made of $500 for each qualifying child under the age of 17.
- Expands eligibility for unemployment insurance and provides an additional $600 per week of unemployment insurance on top of the unemployment amount determined by each state.
- Various provisions to afford relief to students or former students who have student loans outstanding.
- Suspends for one year the need to draw Required Minimum Distributions from traditional IRA accounts and 401k Accounts.
- Increase In loan amounts of loans borrowed from 401k plans.
There are many other provisions in the Act; some are small, some are applicable only to very specific industries, some will only meet the needs of a very select group, but the offerings of the Act are so vast that it is possible that a careful study of all the Act’s provisions will uncover additional opportunities to the astute small business person. Or, perhaps you can use the help of your tax professional to uncover some “found money” in the form of grants, loans, or other stimulants.
For help navigating financials during the COVID-19 pandemic, please contact Masler & Associates, Certified Public Accountants.
