CARES Act Economic Relief Plan for Businesses

The information below is a summary of the CARES Act recently passed signed by President Trump to mitigate the financial impact of the coronavirus pandemic. The information below is subject to change as additional details emerge around how these programs will be implemented.

DISCLAIMER: Fiona & Colin Theseira and RE/MAX United do not provide tax, legal, financial or accounting advice. The information below is for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. Please consult your own tax, legal, financial and accounting advisors to understand how the new CARE Act applies to your situation.

View CARES Act for Individuals and Families

Assistance For Businesses


This program is different and separate from the program in Phase III (“CARES Act”), and participating in this program may make the borrower ineligible for participating in the Phase III program.  These loans are issued by the government, and not by banks.  Businesses with an urgent need for financing may wish to seek more conventional SBA 7(a) loans due to anticipated delays in finalizing terms and details.

Emergency Grants Under SBA Disaster Loan Program for COVID-19

  • Amount: Advance of $10,000 within 3 days
  • Eligibility: US business owners with 500 or fewer employees
  • Permitted Use: Provide paid sick leave, maintain payroll, or meet other debt obligations

More information:

SBA Economic Injury - Disaster Loan Program (EIDL)

  • Loan Size: Up to $2,000,000
  • Eligibility: Small businesses, including ESOPs, and non-profits affected by the coronavirus in presidential- and SBA-declared disaster areas.
    More information:
  • Interest Rate:     2.75% for non-profits
  • 3.75% for small businesses
  • Term length: Variable, but up to 30 years
  • Documentation Needed: Supporting documentation could include most recent business tax returns, a personal financial statement, and a schedule of liabilities listing all current debts

How to apply     

  • Online directly with the SBA at using “Economic Injury” as the reason, or
  • Call the SBA disaster assistance customer service center at 800-659-2955 (TTY: 800-877-8339), or
  • Email

More information:



Small Business - Interruption Loans (Paycheck Protection Program)


Businesses (including sole proprietors & self-employed) & non-profits (except those with Medicaid funds) and

  • with fewer than 500 employees (subject to the limited exceptions); or
  • that meet the Small Business Administration’s industry-based “size standard”;
  • requirements for the applicable NAICS code (based either on number of employees or annual receipts)

Must have been “substantially affected by COVID-19,” which is interpreted as:

  • supply chain disruptions;
  • staffing challenges;
  • a decrease in sales or customers; or
  • shuttered businesses

Loan Duration & Amount

Maximum maturity of 2 years, the amount to be the lesser of (a) $10 million or (b) 2.5x the average total monthly payments by the applicant for payroll costs incurred for 2019; plus

  • the amount of any SBA-provided Economic Injury Disaster Loan (EIDL) taken out after January 1, 2020
  • No collateral or personal guarantees are required
  • Payments on outstanding balances begin after 6 months, prepayment fees are waived, and loans are eligible for forgiveness
  • Interest rate is 0.5%

For newer companies, or those with seasonal employees, average payroll costs from January 1 to February 29, 2020 are used for part (b)

Allowable Use of Funds       

  • Payroll support (up to $100k annual salary), including paid sick, medical, or family leave, and costs related to the continuation of group health care benefits during those periods of leave
  • Employee salaries
  • Mortgage interest payments
  • Rent (including rent under a lease agreement)
  • Utilities; and
  • Any other debt interest obligations that were incurred before the covered period

Loan Forgiveness Requirements

An eligible recipient shall be eligible for forgiveness of indebtedness in an amount equal to the cost of maintaining payroll continuity and other allowable costs during the covered periods (8 weeks from loan origination). The borrower shall submit an application to the lender, including documentation verifying the number of full-time equivalent employees on payroll and other costs specified under “Allowable Use:”

  • payroll tax filings reported to the IRS
  • state income, payroll, and unemployment insurance filings
  • financial statements verifying payments on debt obligations incurred before the covered period; and
  • any other necessary documentation to be determined

At least 75% of the loan funds must be used for payroll expenses to qualify for forgiveness.

The amount of any loan forgiveness will be reduced by any reductions in employee wages (in excess of 25% for any employee) or a reduction in the number of employees during the covered period.

A previously-received EIDL loan that has been refinanced into a PPP loan is eligible for forgiveness.


Canceled indebtedness under this section shall be excluded from gross income

Other Items       

  • Small businesses and sole proprietors can apply beginning April 3rd
  • Self-employed individuals and independent contractors can begin applying April 10th
  • All loans will have the same terms and will be issued by SBA 7(a) lenders
  • Borrowers may not receive an EIDL loan and a PPP loan for the same purpose


SBA Loan Relief


SBA loans that have already been distributed receive 6 months of loan forbearance on principal interest and fees.


Businesses with 500 or fewer employees that have current SBA loans

Employee Retention Credit


  • Employers may receive a refundable payroll tax credit equal to the lesser of 50% of qualified wages or $5,000 per employee for wages paid to employees after March 12, 2020 and before January 1, 2021 if business activities were disrupted or suspended due to any government-imposed restrictions related to containing the spread of the virus
  • Businesses whose operations were not disrupted, but experienced a decline in revenue due to the virus, can also receive the same credits if gross receipts fell 50% as compared to the same quarter in the previous calendar year
  • Credits will continue until the earlier of December 31, 2020 or gross receipts exceed 80% of the same quarter’s gross receipts in the previous year


  • Credit can be claimed by employers with an average of more than 100 employees for all employees who are retained, but not currently working, as a result of COVID-19
  • For employers with an average of fewer than 100 employees, all wages paid qualify for the credit so long as the other requirements are met
  • Credits cannot be claimed for any wages paid by an SBA loan



Credit Support for Affected Businesses (other than Small Businesses)


  • The Secretary of the Treasury (Secretary) is given discretion to determine which businesses will be beneficiaries of the credit support but likely to include businesses that would otherwise not qualify for the Small Business Interruption Loans assistance, such as businesses with more than 500 employees
  • The Secretary will be authorized to make loans, guarantees and other investments (such as an equity stake or warrants) in support of eligible businesses as well as states and municipalities not to exceed $500 billion
  • An independent committee will oversee the program

Loan Amount & Terms

  • Maturity is not to exceed 5 years. The Secretary is given similar discretion on determining the terms related to rates, underwriting, and other terms and conditions. These loans are not forgivable

Compensation Limits

  • Businesses that receive loans or guarantees under this program will be required to agree to certain caps on compensation and severance payments for employees whose compensation exceeded $425,000 in the 2019 calendar year. Employees with compensation in excess of $425,000 will be capped at the 2019 levels, and any severance pay is not to exceed twice the maximum compensation received in 2019
  • For officers or employees who earned more than $3 million in 2019 annual salary, their compensation would be capped at $3 million plus 50% of the amount exceeding $3 million in 2019. For example, an individual earning $6 million in 2019 would be capped at $4.5 million ($3 million + 50% x [$6 million – $3 million] = $4.5 million)
  • These caps will remain in place for an additional 12 months beyond the period when the loan is outstanding

Buybacks & Dividends

  • Companies may not conduct stock buybacks nor provide dividends nor capital distributions to investors for an additional 12 months beyond the period when the loan is outstanding

Employment Levels

  • Until September 30, 2020, companies are to maintain employment levels as of March 24, 2020 to the extent that it’s practical, and in no case is the company to reduce employment by more than 10%


Additional Relief Programs

Income Tax Filing & Payment     

  • The federal tax return filing and payment deadlines are now July 15, 2020
    • Check with state and local tax authorities for adjusted deadlines for those obligations
  • Individual and other non-corporate filers may defer income tax payments that would have been due April 15 without penalty or interest
  • Gig workers and the self-employed are eligible to receive paid sick leave benefits in the form of a tax credit

State and Local Relief Programs

Several local jurisdictions are supporting small businesses with loans, grants, or deferment of tax and fee collections.

Business service providers   

Check with providers as many companies, utilities, etc. are providing discounts, payment deferrals and/or grants to small businesses.

Phase II Stimulus

  • Tax credits for businesses with fewer than 500 employees to cover:
    • Two weeks of paid sick leave for employees who have been quarantined, have a sick family member, or have been affected by school closings
    • Up to three months of paid family and medical leave amounting to no less than two-thirds of regular pay for those employees listed above
  • The option for the Labor Department to exempt businesses with fewer than 50 employees from abiding by the paid leave mandate, if the Labor Department decides the new law could pose an existential threat to the company


Phase III Stimulus       

Delays of payment of Employer Payroll Taxes

  • Payroll taxes due to the IRS through the end of 2020 can be deferred with 50% of those deferred payments due by December 31, 2021 and the remaining 50% due by December 31, 2022
  • Taxpayers that had indebtedness forgiven under the CARES Act are excluded from this benefit

Changes to Net Operating Loss Rules to use losses today against past profits to claim refunds

  • The Act temporarily reverses changes to how net operating losses can be carried back
  • Losses from 2018, 2019 and 2020 will be permitted to be carried back for up to five years (or forego the carryback and instead carry the loss forward)

Increases to the amount of interest expense businesses may deduct from 30% to 50% for 2019 and 2020