CARES is expected to infuse approximately $2.2 trillion into the U.S. economy. The Act addresses a multitude of ways in which the federal government seeks to support businesses impacted by the pandemic and employees affected by COVID-19. Key areas of interest for employers relate to business loans, unemployment benefits, retirement plans, tax credits and executive compensation. The Act was passed by the House of Representatives in the early afternoon of March 27th, 2020 and is making is way to the President for signature.
Paycheck Protection Program (Section 1102)
- Small businesses with less than 500 employees are eligible to receive loans up to a maximum loan amount equal to the lesser of
- The sum of
- 2.5 x the average total monthly payments by the applicant for payroll costs incurred during the one-year period prior to the date on which the loan is made plus
- Any outstanding amount of a loan made during the period beginning on January 31, 2020
- Or $10,000,000
- The sum of
- Loan proceeds must be used for allowable purposes including
- Payroll costs
- Costs related to the continuation of group health care benefits during period of paid sick, medical or family leave, and insurance premiums
- Employee salaries, commissions, or similar compensation
- Payments of interest on any mortgage obligation
- Interest on any other debt obligations incurred before the covered period
- Eligibility considerations include whether the business
- Was in operation on February 15, 2020, and
- Had employees whom the borrower paid salaries and payroll taxes, or
- Paid independent contractors
- The eligible recipient is required to make a good faith certification that
- Due to the uncertainty of the current economic conditions it is necessary to obtain the loan to support ongoing operations of the business
- The funds will be used to retain workers and maintain payroll or make mortgage, lease or utility payments, and
- There isn’t a duplicative application for the same purposes submitted by the business
- The Small Business Administration (SBA) requires lenders to provide complete payment deferment relief (including payment of principal, interest, and fees) for impacted borrowers with covered loans for a period of at least six months, but not more for one year
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Jackson Lewis attorneys are available to assist you with these and other workplace issues. For more information, please contact John Sander (Principal) of Jackson Lewis at John.Sander@jacksonlewis.com or visit www.jacksonlewis.com.
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