Wednesday, I covered the loans that were first made available under the first Coronavirus stimulus package, and the Florida Small Business Emergency Bridge Loan. Yesterday my post focused on the second stimulus package, the Families First Coronavirus Response Act (FFCRA) and the additional expenses and responsibilities placed on employers. Today, I will cover the third and largest stimulus package, the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Stimulus: The Coronavirus Aid, Relief, and Economic Security (CARES) Act

By far and away the biggest relief package at $2.2 Trillion. The CARES Act includes the Paycheck Protection Program, the Emergency EIDC Grants (SBA Loan Advances), Employee Retention Credit, Delayed Payment of Social Security Taxes, Enhancement of Benefits and Covered Individuals, and Executive Compensation Limitations, among other things. How these programs are administered will likely be a work in progress.

The Paycheck Protection Program

Aimed at keeping people employed, this loan allows employers to borrow 2.5 times their average monthly payroll from last year, up to $2 Million. This loan is essentially available to every small business with fewer than 500 employees. That includes sole proprietors and independent contractors, and single-member LLCs.

The big benefit of this loan to small businesses is that most or all of this loan can be forgiven. Amounts spent on payroll costs, interest on building mortgage or rent, utilities, and additional wages paid to tipped employees, during the 8-week period beginning on the date of the origination of the loan, can be forgiven up to the amount of the loan. However, the stimulus states you are required to maintain or quickly rehire employees at current salaries in order for the loans to be forgiven. There are no collateral or personal guarantees required. If the loan is not forgiven, it has to be repaid within 2 years and accrues interest at a rate of 0.5%.

The Emergency EIDC Grants (SBA Loan Advance)

The first stimulus package provided SBA funding for Economic Injury Disaster Loans, however, those funds will take time to get to businesses because of the need and demand. As a result, the CARES Act included an emergency grant of up to $10,000 that could be applied for online at the SBA website at This is part of the Economic Injury Disaster Loans. It provides $10,000 within 3 days of a successful application and it doesn’t have to be repaid and virtually every small business qualifies.

Economic Injury Disaster Loan vs. Paycheck Protection Program

The Economic Injury Disaster Loans (EIDL) will require more information, take longer to process, and will have to be repaid. However, EIDL loans can be as much as $10 million dollars. The Paycheck Protection Program (PPP), on the other hand, requires less information and should be processed much quick. The PPP loans can be completely forgiven, or accrue interest at less than 1% interest.

The SBA has indicated that you can only qualify for the EIDL or PPP. However, they have also indicated that Economic Injury Disaster Loans (EIDL) obtained between January 31, 2020 and June 30, 2020 can be rolled into a Paycheck Protection Program (PPP) loan. What is best for you depends on your situation, however, my suggestion is to apply for everything you think you might need. If you are approved and don’t like the terms, don’t need it, or prefer another option, you can always not accept the loan. Better to have and not need, than to need and not have!

Employee Retention Credit

Employers that do not take the PPP loan are eligible for a payroll tax credit equal to 50% of “qualified wages” paid to employees from March 13, 2020 through December 31, 2020. The total amount of qualified wages that can be counted for an individual employee cannot exceed $10,000. This credit is available to employers whose business operations are either fully or partially suspended by a government order relating to Covid-19, or gross receipts during a calendar quarter are less than 50% of the gross receipts for the same calendar quarter during 2019.

Social Security Tax Credit for Employers

All employers are permitted to delay payment of the 2020 employer portion of the Social Security taxes. The initial 50% of deferred social security tax must be paid by December 31, 2021, and the other 50% by December 31, 2022.

Enhancement of Unemployment Benefits and Covered Employees

The CARES Act temporarily expanded unemployment benefits and who is covered by them. First, who is covered. Anyone that self-certifies that they are available and able to work, but are unemployed or partially unemployed due to Covid-19, either directly or indirectly. The benefits available to covered individuals would be the amount available under state law, plus an additional $600 per week. For individuals that have received the maximum benefits under state law, they will be allotted an additional 13 weeks of benefits.

Need Stimulus Help?

Everyone’s situation is different and some people are better off with one over another. If you aren’t sure what to do, please give me a call. I would be happy to listen and try to help you make the best decision for you.

Good Luck! God Bless! And, Stay Safe!!!