CARES Act Stimulus Opportunities for Employers

The CARES Act Provides Several Benefit Opportunities for Both Employers & Employees

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed on March 27, 2020, to provide funding relief for individuals and businesses that were affected by the COVID-19 health crisis. To help employers navigate through this difficult time, Employer Support Services has provided important information regarding the COVID-19 relief options in the CARES Act.


SBA Loan Programs

The Small Business Administration (SBA) received $349 billion for loan and funding programs to temporarily aid qualified small businesses with new programs, such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Program.

Note: due to the multitude of applications sent in two weeks after the PPP and EIDL Programs were launched, the SBA is currently not accepting new applicants until more funding is available. Funding may be replenished soon by the newest bill that will provide $484 billion for additional COVID-19 relief. This means there may be another date to apply for one of the loans in the near future.


Paycheck Protection Program (PPP)Employer showing frustration in front of laptop.

The PPP loan provides businesses that were affected by COVID-19 between February 15, 2020, and June 30, 2020, payroll coverage for up to eight weeks. The purpose of this program is to encourage small businesses to keep workers employed. The amount of coverage a business can receive is based on employee retention, salary levels, and current SBA fees.

The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities for your business. For more information, refer to the FAQ regarding the PPP provided by the SBA for borrowers and lenders.


Economic Injury Disaster Loan (EIDL) Program

Small businesses experiencing a loss in revenue due to COVID-19 could be eligible for an EIDL advance of up to $10,000. Fortunately for employers, this loan advance does not need to be repaid.

For your business to qualify for an EIDL, it must be a qualified small business that is located in an area that is a declared disaster area. For more information regarding receiving an EIDL loan for your business, see this guide provided by the U.S. Chamber of Commerce.


SBA Express Bridge Loans

The SBA states, “if a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan.”

What this means is if your business applied for a loan through the EIDL and your business is in need of immediate funds, you may be able to receive a loan of up to $25,000 that will need to be repaid in full or in part from what your company receives from the EIDL loan.

Small businesses that qualify for an SBA Express Bridge Loan can apply with an SBA banking lender that they have an existing banking relationship with from before March 13, 2020. For more guidance on the Express Bridge Loan, refer to this guide provided by the SBA.

Small Business Debt Relief Program (SBDRF)Woman's hands holding documents related to CARES Act.

The SBDRF provides immediate relief to employers and small businesses with non-disaster-related SBA loans, either from new or existing borrowers, with temporary relief from payments. The SBA guidelines for borrowers are as follows:

For existing borrowers with a 7(a), 504, or Microloans: The SBA will automatically cover loan payments for six months with principal, interest, and fee coverage included.

For new borrowers: The SBA will cover loan payments, including principal, interest, and fees, if the borrower applies for and receives a 7(a), 504, or Microloan no later than September 27, 2020.

It is important to note that those who apply for SBDRF cannot use any other assistance to pay for loans or use SBDRF to pay off any other disaster-related loans.


Other Stimulus Options Available for Employers and Employees Under the CARES Act

We mentioned the loans and provisions businesses could receive for necessary economic protection. However, there are a few other options that the CARES Act provides through the benefits your business may currently offer to employees. We have provided a few examples below.


Early Money Withdrawal from Retirement

Individuals can take as much as $100,000 out of 401k plans and IRA distributions early without paying the 10 percent penalty fee. This differs from the government stimulus checks as an employee’s 401k plan sponsor permits a person to receive distribution from a coronavirus-related hardship.

However, the taxes will still have to be paid back at a later date, so we advise people to consider this as a last resort method.


Flexible Spending Account (FSA) Reimbursement

With an FSA, employees have the ability to pre-tax unreimbursed medical-related expenses. The IRS determines which expenses qualify for reimbursement under what your current FSA plan is eligible to cover. Additionally, the FSA store has provided virus protection items that are eligible for FSA reimbursement.

Because not all FSAs are the same, we recommend that you check with your administrator or insurance provider to see what is covered under your Summary Plan Description (SPD).


For Assistance Through This Time, Reach Out to ESS

We are helping our clients by providing specific, individualized guidance through the available loan programs and answering any questions regarding eligibility and how to maximize the use of their CARES Act loans.

For more information or assistance with your business’s loan application, speak to an ESS representative today.

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