By: Tristan Hill
FAYETTEVILLE, Ark. — The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, passed both houses of Congress and was ultimately signed by President Trump on Friday, March 27.
The historic act provides a massive $2 trillion in financial relief to various individuals and economic sectors and spans 880 pages. The expansive document covers many facets of the economy – with highlights outlined here.
Small Businesses
The first section of the act grants businesses employing less than 500 people the eligibility to apply for covered loans up to $10 million from the Small Business Administration. Sole proprietors, independent contractors, and self-employed individuals are also granted application under different eligibility outlines. Portions of the loans used to fund payroll, expenses such as rent, or payment of previous debts are eligible for forgiveness by the Administration.
$17 billion will go to six months of payments for businesses already holding loans from the Small Business Administration.
An additional $10 billion will be allocated to grants for small business to cover initial operating costs.
A further $10 billion is assigned to the Minority Business Development Agency to provide grants for, “the education, training, and advising of minority business enterprises and their employees,” on the effects of COVID-19 on health as well as businesses, and practices to minimize the impact.
Individuals
With over 3.3 million Americans filing for unemployment in recent weeks, the act allocates an additional $260 billion to the U.S. unemployment program.
The act grants, “Federal Pandemic Unemployment Compensation,” to workers meeting specific prerequisites that prove that they have been directly affected by COVID-19, such as if, “…the individual’s place of employment is closed as a direct result of the COVID–19 public health emergency,” or, “…the individual has become the breadwinner or major support for a household because the head of the household has died as a direct result of COVID–19.” The bill allocates an additional $260 billion, however the dollar amount may change based on the number of people that apply for unemployment. The Secretary of Labor is given the authority to further expand the conditions under which a person could be eligible, and the Secretary of the Treasury is authorized to transfer money from the general fund of the U.S. Treasury as the Secretary of Labor sees fit.
Self-employed individuals such as freelancers are eligible to apply for the pandemic unemployment compensation through the end of 2020 given they can prove loss of work due to COVID-19.
Employers are given the ability to supply up to $5,250 in non-taxable student loan repayment benefits. Employees who receive these benefits would not be required to include the money as income on their taxes.
The 2019 tax return deadline has been extended to July 15. Those who have already filed or still intend to do so will receive their refund as normal.
Many individuals earning less than $75,000 will receive a one-time payment of $1,200. Families will receive an additional $500 per child. Eligibility is based on 2018 or 2019 tax filings. Those who draw social security but don’t file taxes remain eligible based on information from the Social Security Administration. Those who earn between $75,000 and $99,000 will receive incrementally less, with those earning over $99,000 being ineligible for the payment. In addition, those who are also ineligible are listed as, “any nonresident alien individual, any individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, and an estate or trust.” This means that working college students who are still claimed as dependents on their parents’ taxes will be ineligible for the payment.
Big Business
Airlines will be given roughly $58 billion to help them remain open. Portions of the amount must be put toward employee wages, salaries, and benefits. Those amounts total $3 billion for airline contractors, $4 billion for cargo air carriers, and $25 billion for passenger airlines.
Companies receiving loans will be disallowed from making stock buybacks during the period of the loan and a year after the term’s conclusion.
A refundable tax credit is put in place for closed or distressed businesses to keep workers on payroll.
Healthcare
The Secretary of Health and Human Services is instructed to, “establish a national blood donation awareness campaign,” with one or more private or public nonprofit entities. The campaign may include, “television, radio, internet, and newspaper public service announcements.”
Guidelines must be created on the, “sharing of patients’ protected health information.” within 180 days of enactment of the act.
$1.3 billion is allocated to existing public health centers, “for the detection of SARS-CoV-2 or the prevention, diagnosis, and treatment of COVID-19.”
All private health insurance plans are required to provide free coronavirus testing as well as cover COVID-19 treatment and vaccinations.
Businesses that manufacture, “devices that are life-supporting, life-sustaining, or intended for use in emergency medical care or during surgery,” must notify the Secretary of Health and Human Services if the manufacture of the device is discontinued during a public health emergency in an attempt to prevent shortages.
$100 billion is allocated to hospitals responding to COVID-19.
Education
All federal student loans and interest payments are deferred through September 30 without penalty.
Schools are allowed to convert work-study funds to grants that can be used to continue to pay students’ work-study wages while schools are suspended.
Students who drop out as a result of the coronavirus will not be expected to pay back aid or grants that they have already received and will not lose eligibility for subsidized loans or Pell Grants.
An extensive list of universities, arts programs, and other institutions will receive additional funding.
State and Local Government
Almost $340 billion has been dedicated to programs to assist state and local governments, $274 billion of which will go directly to COVID-19 aid at the local level. $150 billion in direct aid will go to states low on funds.
Safety Net
The Supplemental Nutrition Assistance Program will receive $15.5 billion to cover new applications.
$8.8 billion is allotted to schools to allow them to continue to provide meals for students despite shutdowns.
$450 million will be distributed to local food banks and community food centers.
With the most recent IRS information estimating there to be 143.3 million taxpayers in the U.S., the package can be expected to cost an average of almost $14,000 per taxpayer.
An 880-page PDF version of the bill can be found here.