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Top 5 Things to Know about the CARES Act

Important note: While this article highlights provisions in the recently passed CARES Act, federal departments, agencies, and administrations will create their own regulations or rules in order to carry out this legislation. For the most accurate information, continue to check websites (provided below) for the Department of Labor, Department of Education, Department of Health and Human Services, the Office of Internal Revenue Services, and any other government website. You should also seek the advice of your own legal counsel and business advisors. 

1) Paycheck Protection Program 

This provision gives the Small Business Administration (SBA) the ability to guarantee $350 billion in loans to small businesses using a network of banks. The Paycheck program provides eight weeks of cash-flow assistance to small businesses with 500 employees or fewer.

The low-interest loans are meant to cover payroll costs, paid sick leave, supply-chain disruptions, employee salaries, health-insurance premiums, and mortgage payments. The maximum loan amount is $10 million while the interest rate on the loans can’t surpass 4%. You can find a fact sheet from Senator Rubio’s office HERE. The $350 billion in funding will be applied to the program and awarded to businesses that meet the criteria on a first-come-first serve basis. For more information how on to apply for the PPP loan, first check with your local bank/lender to see if they are an approved 7(a) lender. You can also find more information when available at the SBA website.

The AAO joined other organizations to support the inclusion of this program in the final bill. You can read that letter, sent to Senators Rubio and Collins, HERE.

2)   Employee Retention Credit for Employers Subject to Closure Due to COVID-19 

The provision provides a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis. The credit is available to employers whose (1) operations were fully or partially suspended, due to a COVID-19-related shut-down order, or (2) gross receipts declined by more than 50 percent when compared to the same quarter in the prior year.

The credit is based on qualified wages paid to the employee. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an eligible employee. The credit is provided for wages paid or incurred from March 13, 2020 through December 31, 2020.

Check the IRS website for more information as it becomes available.

3)   Section 3212. Telehealth Network and Telehealth Resource Centers Grant Programs.  

Reauthorizes Health Resources and Services Administration (HRSA) grant programs that promote the use of telehealth technologies for health care delivery, education, and health information services. Telehealth offers flexibility for patients with, or at risk of contracting, COVID-19 to access screening or monitoring care while avoiding exposure to others.

More information about the grant programs will be posted HERE as it becomes available.

4)   Temporary Relief for Federal Student Loan Borrowers  

This provision requires the Secretary to defer student loan payments, principal, and interest for 6 months, through September 30, 2020, without penalty to the borrower for all federally owned loans. This provides relief for over 95 percent of student loan borrowers.

It also codifies President Trump’s announcement on March 13 to suspend all accrual of interest for federal loans. For the purposes of loan forgiveness or rehabilitation programs and reporting to consumer reporting agencies, each month in which the loan payment is suspended is counted as if the borrower had made a payment that month. This means no disruptions would occur towards loan forgiveness obligations.

During the time when student loan payments are suspended, the Secretary also will suspend all involuntary collection activities related to loans, including wage garnishment or reductions in tax refunds and other federal benefits.

More information about student loan relief can be found HERE.

5)   Limitations on Paid Leave and Emergency Paid Sick Leave 

This provision creates a limitation stating an employer shall not be required to pay more than $200 per day and $10,000 in the aggregate for each employee. Also, employers shall not be required to pay more than $511 per day and $5,110 in the aggregate for sick leave or more than $2,000 in the aggregate to care for a quarantined individual or child for each employee. This provision also creates regulatory authority to implement tax credit advances instead of having to be reimbursed.

More information on these limitations, as well as answers to questions regarding paid leave and emergency paid sick leave can be found HERE.