Summary of CARES Act
Monday, March 30, 2020
AACS has been actively monitoring the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020. On March 27, 2020 Congress passed the largest stimulus in American history totalling $2 trillion. The CARES Act is designed for “emergency assistance and healthcare response for individuals, families, and businesses affected by the 2020 Coronavirus pandemic.”
AACS will continue to monitor the CARES Act as it works its way from passage, signing by the President, and finally through implementation. Additional stimulus packages and other legislation are also expected in the future as the economic situation evolves.
Below are some aspects of the CARES Act AACS believes will be of interest to our members.
Impact on Non-Profits & Small Business
The CARES Act establishes “Emergency Small Business Administration 7(a)” loans of up to $10 million for organizations to help maintain operations (payroll, mortgage, rent, utilities and certain debt payments) for those that existed on or before March 1, 2020. Furthermore, employers that maintain their staffing levels between March 1 and June 30 would be eligible for loan forgiveness provisions. These loans are available to Section 501(c)(3)s, Section 501(c)(19)s [Veterans Organizations], Tribal businesses, small and other business that total 500 employees or fewer.
Section 501(c)(6) organizations are not eligible for small business loan relief. There is a push to have these organizations included as eligible entities under the next stimulus package.
Emergency Small Business Loans
Emergency small business loans were expanded, and various creditworthiness requirements were eliminated until December 31, 2020.
Additional Funds for States & Health Care Facilities
Healthcare providers will be receiving $100 billion in grants for their efforts in combating the coronavirus and to back fill revenue lost from delaying profitable elective surgeries.
Medicare payments were increased by 20% to help boost provider revenue.
All 50 states and U.S. Territories received additional money to help fill budgets that are being decimated by efforts to stem the spread of the coronavirus.
Charitable Giving Incentive
A universal charitable deduction of up to $300 available for cash-only, non-itemized tax filings was included. Furthermore, current adjusted gross income limits on charitable deduction have also been suspected for both business and individuals.
Employee Retention Payroll Tax Credit
The CARES Act created refundable payroll tax credits of up to $10,000 for each employee available to eligible employers that have seen at least 50% reduction in their revenue in the first quarter of 2020 in comparison to the first quarter of 2019 due to Covid-19. Business are allowed to fully carry back net operating losses occurring in 2018, 2019, or 2020 to the previous 5 years, in order to help increase their liquidity. These provisions are available to small businesses, Section 501(c)(3)s, and Section 501(c)(6)s, among others.
Economic Stabilization Fund
One of the cornerstones of the CARES Act is the U.S. Department of Treasury’s Exchange Stabilization Fund. This almost $400 billion fund’s purpose is to create a loan guarantee program for major industries. The eligible organizations are defined as:
- “A United States business that has not otherwise received economic relief in the form of loans or loan guarantees provided under” the CARES Act
- Employs 501-10,000 people
It is possible certain non-profits will qualify for this aid, but it is yet unclear if Section 501(c)(6)s are included. The Treasury Department will now begin the process of writing regulations and procedures for this fund.