Your Guide to the Coronavirus Aid, Relief, and Economic Security (CARES) Act


Attention all small business owners, sole proprietors, and independent contractors!  The Coronavirus Aid, Relief, and Economic Security (CARES) Act was recently signed into law.  Hundreds of billions of dollars have been set aside to help your business survive these uncertain times.  The text of the law itself is hundreds of pages of long.  To try and help, we have prepared a basic guide to the most important provisions of the law as far as your business is concerned:  the Paycheck Protection Program; Economic Injury Disaster Loans and Emergency Economic Injury Grants; Small Business Debt Relief Program; Small Business Tax Provisions; and Small Business Counseling.  For more detailed information about any of these topics, or the CARES Act generally, be sure to visit the Small Business Administration’s website at   For starters, here are some of the most important provisions of the stimulus package:

Small Business Debt Relief Program

If your small business or sole proprietorship already has a non-disaster loan through the Small Business Administration, or takes out such a loan in the next six months, the SBA is offering immediate payment relief.

  • How does it work?
    • The SBA will cover all loan payments, including principal, interest, and fees, for six months.
  • What loans are eligible?
    • Any non-disaster SBA loans, in particular 7(a) loans, 504 loans, and microloans.
  • How do I know if I qualify for these loans?

Economic Injury Disaster Loans and Emergency Economic Injury Grants

Small businesses harmed by COVID-19 might also consider applying for an Economic Injury Disaster Loan, which includes the possibility of a $10,000.00 grant that does not need to be repaid.  Here are the basics:

  • What businesses are eligible?
    • Any for-profit, nonprofit, sole proprietorship, or independent contractor that was in operation on or before February 15, 2020 and employs fewer than 500 people.
  • What is the potential loan size?
    • Loans will be given up to $2 million. These are low interest loans with principle and interest deferment available for up to 4 years.  Loan funds may be used for practically all business expenses, including payroll, rent, and other operating expenses.
  • How do the grants work?
    • After applying for an Emergency Economic Injury Loan, you may then apply for a grant of up to $10,000.00. These grants do not need to be repaid.  You may currently apply for such a grant through December 31, 2020.
  • If I receive an Emergency Economic Injury Loan and/or Grant, can I also apply for a Paycheck Protection Program loan?
    • Yes you can. If you already received an Emergency Economic Injury Grant, the amount advanced will be subtracted from the amount of your Paycheck Protection Program loan that is ultimately forgiven.
  • How do I apply?

Small Business Tax Provisions

Businesses not receiving Paycheck Protection Program loans may be eligible for tax credits and deferrals.  A refundable payroll tax credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings.  The tax credit covers 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis.  The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis. Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer fulltime employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave.  The credit is provided through December 31, 2020.

Employers may also defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022.  Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability.  As with the tax credit program, these deferments are not available to employers receiving assistance through the Paycheck Protection Program.

Paycheck Protection Program

This program provides cash-flow assistance through federally-guaranteed loans to employers who maintain their payroll during this emergency.  Many loans will be forgiven in full.  Here are the basics:

  • What businesses are eligible?
    • Any for-profit, nonprofit, sole proprietorship, or independent contractor that was in operation on or before February 15, 2020 and employs fewer than 500 people.
  • What costs are eligible?
    • Compensation (e.g. salary, wage, commission, tips)
    • Paid vacation, parental, family, medical, or sick leave
    • Allowance for dismissal or separation
    • Payment required for the provisions of group health care benefits, including insurance premiums
    • Retirement benefits
    • Payment of state or local taxes assessed on the compensation of employees
  • How is the loan size determined?
    • Loan amounts are determined by whether your operations during 2019, if any:
      • If you were in business between February 15, 2019 – June 30, 2019, your maximum loan amount is equal to 250% of your average monthly payroll costs during that time period.
      • If you were not in business between February 15, 2019 – June 30, 2019, your maximum loan amount is equal to 250% of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
    • The maximum loan any business may receive is $10 million.
  • What are the loan terms, interest rate, and fees?
    • The maximum term is 10 years
    • The maximum interest rate is 4%
    • There are no loan fees or prepayment fees
  • How does loan forgiveness work?
    • Certain loans may be eligible for complete forgiveness, calculated based on a formula of expenses over an eight-week period of covered time. You must apply for forgiveness through your specific PPP lender.  Any amounts not forgiven will be carried forward per the terms above, for a maximum of 10 years at no more than 4% interest.
  • How do I apply?
  • When can I apply?
    • Applications will be accepted as soon as April 3, 2020. Applications are currently due no later than June 30, 2020.



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