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Coronavirus Aid, Relief, and Economic Security (CARES) Act - Key Provisions

The U.S. Senate has passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and it is expected to pass through the House by the end of the week. The Department of Economic Development for the City of Clinton believes that is important that we share this information with our business community and everybody that can utilize any of the key provisions of the CARES Act. Below you will find a summary sent to us on the key provisions of the CARES Act.

CARES Act Key Provisions

 
  • Small Business Paycheck Protection Program
    The CARES Act includes a $325 billion small business loan program designed for businesses having fewer than 500 employees to be administered through the Small Business Administration (SBA). The maximum amount of the loan is the lesser of a multiple of 2.5x payroll or $10 million. Under certain conditions, there are aspects of the loan that qualify for forgiveness. The deadline to apply for the small business loan program is June 30, 2020, and details are expected to be issued soon and accessible at SBA.gov.
 
  • Large Business Loan Program and Credit Facility
    A second loan program has been established for larger businesses that do not otherwise qualify for the small business offering. While the total value of this program is $500 billion, after the deduction for amounts directed to airlines and industries designated for national security, there is $425 billion available. It is expected that this amount will be leveraged significantly and potentially provide up to $4 trillion in financial support. Loans must be secured, for a term of not more than 5 years, and subject to an annualized interest rate that is not higher than 2 percent per annum. For the first six months after any direct loan is made, there is no principal or interest due or payable. That may be extended at the Treasury Secretary's discretion. While the loan is outstanding, stock repurchases are prohibited by borrowers, who are also required to maintain existing employment to the extent practical and abide by limits imposed on executive compensation. The U.S. Treasury is working through the guidance and is required to publish procedures for applications and the minimum requirements within 10 days of the bill's passage by the House.
 
  • Corporate Tax Provisions
    There are a number of provisions providing corporate tax relief. These include extension of NOL carrybacks for five years, delay of employer payroll taxes, correction of qualified improvement property depreciation back to 15 years, employee retention credits, relaxation of business interest deductions and employee retention credits.
 
  • Individual Tax Relief
    Recovery rebates of up to $1,200 for individuals (phase out beginning at $75,000 annual income) or $2,400 for married couples (phase out beginning at $150,000 annual income), each increased by $500 for every child.
 
  • Enhanced Unemployment Benefits
    Unemployment benefits by adding a $600/week across‑the‑board payment increase through the end of July, 2020. In addition, for those who need it, the bill provides an additional 13 weeks of benefits beyond what states typically allow. The expansion in unemployment benefits expires at the end of 2020 in recognition of the temporary nature of this challenge. Benefits should be accessible via a state's unemployment insurance website.
 
  • Banking Provisions
    The Federal Deposit Insurance Corp (FDIC) has provided expanded authority to guarantee bank accounts and ease lending regulations. The Act also allows banks to postpone compliance with the Current Expected Credit Losses standard and ease accounting rules to make it easier for banks to restructure Troubled Debt Ratio without taking a hit to capital and regulatory relief from accounting standards for loan modifications.