CARES Act: A rundown of aid from Congress

In response to a request from The Charlotte News for information about the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Senator Sanders’s office provided the following material. The provisions apply to all small businesses hit by the pandemic, both nonprofit and for-profit.

Paycheck Protection Program
The stimulus includes nearly $350 billion in funding for a provision to create a Paycheck Protection Program (PPP) that will provide small businesses and other entities (non-profits can apply) with zero-fee loans of up to $10 million. Up to 8 weeks of average payroll and other costs will be forgiven if the business retains its employees and their salary levels. Principal and interest are deferred for up to a year, and all borrower fees are waived. This temporary emergency assistance through the U.S. Small Business Administration (SBA) and the Department of Treasury can be used in coordination with other COVID-financing assistance established in the bill or any other existing SBA loan program.

Emergency Economic Injury Grants
The stimulus includes $10 billion in funding for a provision to provide an advance of $10,000 to small businesses and nonprofits that apply for an SBA economic injury disaster loan (EIDL) within three days of applying for the loan. EIDLs are loans of up to $2 million that carry interest rates up to 3.75 percent for companies and up to 2.75 percent for nonprofits, as well as principal and interest deferment for up to 4 years. The loans may be used to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses.

The EIDL grant does not need to be repaid, even if the grantee is subsequently denied an EIDL, and may be used to provide paid sick leave to employees, maintaining payroll, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments. Eligible grant recipients must have been in operation on January 31, 2020. The grant is available to small businesses, private nonprofits, sole proprietors and independent contractor businesses, as well as cooperatives and employee-owned businesses.

A business that receives an EIDL between January 31, 2020 and June 30, 2020 as a result of a COVID-19 disaster declaration is eligible to apply for a PPP loan or the business may refinance their EIDL into a PPP loan. In either case, the emergency EIDL grant award of up to $10,000 would be subtracted from the amount forgiven in the payroll protection plan.

SBA’s Economic Injury Disaster Loans (EIDL) are now available. Important details about EIDLs are as follows:

  • Once a borrower applies, approval timelines depend on volume. Typical timeline for approval is 2-3 weeks and disbursement can take up to 5 days. Borrowers are assigned individual loan officers for servicing of the loan.
  • This loan is for businesses that were financially viable prior to the COVID-19 outbreak, so some loans may be declined.
  • If a business is approved for the loan, they can ask for an increase if needed.
  • SBA coordinates with the Vermont Small Business Development Center (SBDC), who can help with applications.

In addition to EIDL applications, Vermont Small Business Development Center (SBDC) has staff who are helping businesses think through all of their options right now. More information from the SBDC web site. The Vermont Agency of Commerce and Community Development is posting updates and current news. In addition, the Vermont Department of Labor is posting resources.

Pandemic Unemployment Assistance
This provision would provide unemployment benefits to individuals who do not qualify for regular unemployment compensation and are unable to work because of the COVID-19 public health emergency. It will cover self-employed workers (including gig workers and independent contractors), part-time workers, and those with limited work histories. The changes made to increase the size of regular unemployment benefits and make them available for additional weeks will also apply to benefits received through the Pandemic Unemployment Assistance program. Pandemic Unemployment Assistance will be state-administered but fully federally funded

Emergency Increase in Unemployment Compensation
This provision would add an additional $600 in Federal Pandemic Unemployment Compensation to every weekly unemployment benefit, effective until
July 31, 2020. This $600 benefit will be taxable (like regular unemployment benefits), but it will be disregarded in determining Medicaid or CHIP eligibility.

Individual Provisions – Recovery Rebates for Individuals
Cash Assistance: $1,200 one-time payment per adult (up to $75,000 in annual income (or adjusted gross) for individuals and $150,000 for joint filers) and $500 per child. Rebate amount reduced by $5 for each $100 a taxpayer’s income exceeds the income threshold with complete phase-out at $99,000 for individuals and $198,000 for joint filers. This includes those with no income. The rebates will be paid out as advance refunds (in the form of checks or direct deposit) on the basis of taxpayers’ filed tax year 2019 returns (or tax year 2018, if a 2019 return has not yet been filed). Non-filers generally need to file a tax return in order to claim a rebate, although IRS may coordinate with other federal agencies in some instances to get checks out.

The Families First Act includes some new provisions for paid sick/family leave. Here are three resource pages/articles that may be useful:

Department of Labor
Industry Dive
Internal Revenue Service