The US Senate unanimously passed the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) late Wednesday on 3/25/20. The bill will be voted on by the US House today. Assuming it passes, which it appears it will, the CARES Act could be signed into law as early as Friday afternoon. With an estimated $2.2 trillion price tag, the CARES Act would be the largest economic stimulus package in US history.
Steptoe & Johnson, legal advisors to the Council for Insurance Agents and Brokers, have prepared a comprehensive summary of this act.
As the summary outlines, there are many features of the CARES Act. Of particular interest to your small business clients may be the expansion of the SBA loan program. The law allows the SBA to provide grants and 100% federally-backed loans to help qualified small businesses pay operational costs, such as payroll, rent/mortgage, utilities and health insurance premiums. Any loans, or any portion thereof, that are used for certain purposes (i.e., covering payroll obligations) may be forgiven, but forgiveness amounts will be reduced for employee terminations or wage reductions. Eligible businesses may access the program through private banking institutions already authorized to make SBA loans. As the pool of funds are limited, it is critical for qualified small businesses to act quickly once the program goes into effect (date TBD). More details on the expanded SBA loan program can be found under Title I of the CARES Act.
**Update: as of 3/27/20, the House has passed the CARES Act and it is expected the President will sign it immediately.
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