I started my employment with PEG Companies on March 10, 2020.  At the time, I did not appreciate how much my professional and personal life would be impacted by the COVID-19 (“Coronavirus”) pandemic. Like many of you, I have spent the last few weeks grappling with sometimes daily changes to everyday life.

Professionally, these changes have come in the form of hours spent reviewing, and attempting to make sense of, hundreds of pages of legislation – and accompanying administrative guidance – that has passed in response to the COVID-19 crisis.  Although undoubtably flawed due to its rushed and politically challenging passage, this legislation at least attempts to help individuals and businesses alike survive financially at a time when much of the world economy has come to a standstill.

So, how can individuals and businesses leverage the new federal benefits available to them? Read on to find out.

Individuals

The “Coronavirus Aid, Relief, and Economic Security Act” or “CARES Act” aims to help individuals through two avenues: increased unemployment benefits and direct payments.

• Unemployment: The CARES Act adds $600 to any state-specific unemployment benefit from April 5, 2020-July 31, 2020. This benefit is taxable, and it is not subject to any state-specific waiting period.  Additionally, the CARES Act increases unemployment benefits from 26 weeks to 39 weeks through December 31, 2020. The CARES Act also attempts to incentivize states to waive their own waiting periods by reimbursing states for 100% of the benefits paid during what would normally be the state-specific waiting period.
• Direct payments: The CARES Act provides direct payments based on the adjusted gross income reflected on an individual’s or joint filer’s 2018 or 2019 tax return. Single adults who made $75,000 or less and heads of households who made $112,500 or less are entitled to $1,200. Married couples who made $150,000 or less are entitled to $2,400. Additionally, households are entitled to $500 for every child under 17.  Payments to individuals who made more than $75,000 and married couples who made more than $150,000 are reduced by 5% of the taxpayer’s adjusted gross income over $75,000/$150,000.  Consequently, the payments phase out completely for single taxpayers who made more than $99,000 and joint filers who made more than $198,000.

Businesses

The CARES Act aims to help businesses through a variety of loan programs depending on the size and needs of the business.

• Economic Injury Disaster Loan: The “EIDL” program establishes an emergency grant to allow covered entities that have applied for an EIDL loan to request an advance of no more than $10,000 on that loan. The SBA must distribute the funds within three days, and the entity is not required to repay the grant even if it does not subsequently qualify for an EIDL loan.
• Payroll Protection Program: The “PPP” expands the SBA’s 7(a) loan program and authorizes up to $669 billion in potentially forgivable loans to companies with fewer than 500 employees to retain and pay their employees. The amount of the loan is based on the company’s average monthly payroll and is capped at $10 million.  Both the rollout and the implementation of the PPP has been fraught with confusion and controversy.  These challenges appear likely to continue as the SBA implements the forgiveness piece of the legislation in the coming weeks.
• Main Street Lending Program: The “MSLP” allocates $600 billion for loans to companies with up to 10,000 employees or a maximum of $2.5 billion in 2019 annual revenues. To qualify under the MSLP, a company must be created or organized in the U.S. or under U.S. laws, have significant operations in the U.S., and have a majority of its employees based in the U.S. Unlike the PPP, the MSLP loans are not forgivable. Additionally, the MSLP requires companies to make numerous certifications and places limits on executive compensation.

In the coming weeks, I have no doubt that the CARES Act – and additional legislation passed by Congress – will continue to develop.  In the meantime, below is a collection of resources that provide detailed information on the programs and instructions on how to apply:

https://home.treasury.gov/policy-issues/cares

https://www.sbc.senate.gov/public/index.cfm/guide-to-the-cares-act

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options