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Last week, President Trump signed into law the historic $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The legislation is the largest economic relief bill in US history and provides aid for Americans and businesses via direct payments, expanded unemployment insurance, loans and grants.

At BWM Financial, we recognize that many of the programs in the CARES Act may be relevant to our clients; we’ve summarized several of the key initiatives below. Please consider this just a starting point: We encourage our clients to speak with us to gather greater detail about the most salient portions of the 880-page measure.

Programs for small businesses

Multiple programs will be soon available from the Small Business Administration (SBA), including:

  • Capital to cover the cost of retaining employees – Paycheck Protection Program
    The Paycheck Protection Program (PPP) is designed to provide cash-flow assistance to small businesses through 100% federally guaranteed loans of up to $10 million to employers who maintain their payrolls during the emergency. Businesses receiving a loan through the PPP are eligible for loan forgiveness. The amount of forgiveness may equal as much as a business’s costs during the eight weeks following the date of the loan’s origination for categories such as payroll, payments of interest on mortgage obligations, rent and utilities. Small businesses and other entities are eligible to apply if impacted by COVID-19 between February 15 and June 30, 2020.
  • A quick infusion of a smaller amount of cash – Emergency Economic Injury Grants
    These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits impacted by COVID-19 within three days of successfully applying for an SBA Economic Injury Disaster Loan.
  • Help with payments on current SBA loans – Small Business Debt Relief Program
    The CARES Act provides immediate relief to small businesses with non-disaster SBA loans by covering all loan payments (including principal, interest and fees) for six months. The relief is also available to new borrowers who take out loans in the next six months. Borrowers may separately take out a PPP loan, but debt relief under this program will not apply to a PPP loan.

Aid for larger businesses

The CARES Act features provisions for larger businesses, including:

  • Cash-saving relief – Employee Retention Credit and Delay of Employer Payroll Taxes
    An employee retention tax credit is available for struggling businesses that are not eligible or choose not to participate in the Paycheck Protection Program. Any business that has been forced to fully or partially suspend operations, or that has seen a significant drop in revenues is eligible for a 50% credit for wages paid to furloughed or reduced-hour employees. The overall limit on wages per employee is $10,000. The credit can be claimed against the business’s quarterly payroll tax liability.The CARES Act also allows employers and self-employed individuals to postpone deposits of their share of federal Social Security tax on employees’ wages paid through December 31, 2020. Employers can deposit 50% of the deferred taxes on or before December 31, 2021, and the remaining 50% by December 31, 2022.
  • Possible entitlement to significant tax refunds – Changes to net operating loss rules
    The CARES Act provides that net operating losses (NOL) incurred in 2018, 2019 and 2020 may be carried back to offset taxable income earned during the five-year period prior to the year in which the NOL was incurred. The CARES Act also temporarily removes the taxable income limitation, therefore allowing taxpayers utilize NOLs to offset 100% of taxable income in tax years 2018, 2019 and 2020.

Help for individual Americans

A significant portion of the new legislation is geared toward supporting individuals, including:

  • One-time cash infusions to help keep Americans afloat – Recovery rebates
    All US residents or citizens with adjusted gross income under $75,000 ($112,500 for head of household and $150,000 married), who are not the dependent of another taxpayer and have a work-eligible Social Security Number, are eligible for a $1,200 ($2,400 married) rebate. They are also eligible for an additional $500 per child. The rebates will be trimmed by $5 for each $100 of income over those thresholds, completely phasing out for individuals whose incomes exceed $99,000, $146,500 for head of households with one child, and $198,000 for joint filers who don’t have children.For the vast majority of Americans, no action on their part will be required to receive a rebate check: The IRS will use a taxpayer’s 2019 tax return if filed or their 2018 return if they haven’t filed their 2019 return. The IRS will send out rebates automatically to direct deposit accounts or to the address provided on the last tax return submitted. Several public sites offer calculators to see how much you may receive, including The Washington Post and CNBC.
  • More assistance for workers who’ve lost their jobs – Unemployment insurance
    Between now and July 31, 2020, an additional $600 will be added to every unemployment compensation check. Additionally, the CARES Act temporarily expands unemployment insurance to cover individuals who are not traditionally covered, including the self-employed, gig-workers, independent contractors and workers with irregular work history. It also expands the list of allowable criteria for claiming unemployment compensation to include many reasons related to the COVID-19 public health emergency.
  • Extra time to pay taxes – Extended tax filing date
    The deadlines to file and pay federal income taxes are extended to July 15, 2020. California has also extended tax file and pay deadlines to July 15, 2020.
  • Relief for federal student loan borrowers – Deferred payments and waived interest
    For certain federal student loan borrowers, payments are suspended through September 30, 2020 and interest during the period is waived altogether.
  • More flexibility to access funds in retirement plans – Relaxing of retirement account rules
    Several provisions in the CARES Act cover retirement accounts, including one which suspends required minimum distributions for 2020. In addition, the CARES Act waives the 10% penalty for early withdrawals from certain plans for participants who are experiencing financial hardship related to the coronavirus. Lastly, loans limits from retirement plans have been lifted to $100,000, and the rule that loans may not exceed half the vested account balance has been removed.


The Senate Committee on Small Business & Entrepreneurship has published a helpful guide and FAQ document; info is also available directly from the SBA. California Senator Dianne Feinstein’s office has published documents for businesses and individuals. Mainstream legal news publications, such as the National Law Review, are also providing detailed coverage.

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The information provided is for educational and informational purposes only. This should not be construed as legal/tax advice. Should you require legal/tax advice, please contact a legal/tax professional in your area.