While everyone has been working diligently to social distance and keep themselves healthy, the government has been busy preparing legislation to get us through this difficult time. Our next few blog posts will highlight and discuss some of the key points in this act to help you and your families through this difficult time.
On March 27, 2020, the government passed the Coronavirus Aid, Relief and Economic Security Act (CARES Act) which is a $2 trillion stimulus bill designed to help individuals, families, and businesses during the COVID-19 crisis. While the bill itself is over 800 pages, we wanted to give an overview of provisions that may apply to our clients and families, giving special attention to some of the financial provisions and programs for individuals and small businesses. We recently came across a great summary of some of the CARES Act benefits by Leon LaBrecque on Forbes.com. We encourage you to check out that article (here).
The Act is designed to help individuals and families in several ways. The Act includes direct stimulus payments to qualifying individuals and couples, expanded unemployment benefits, waiver of penalties for early withdrawal of retirement funds up to a certain dollar amount, increased loan amounts allowed to be taken from retirement plans, and federal student loan relief. These provisions will help people pay for their basic needs during this time if they can no longer work, are laid off, or their work is reduced related to COVID-19. Our next blog post will highlight several of these provisions in more detail and discuss who qualifies for these relief provisions.
The CARES ACT also includes several provisions to help businesses, especially small businesses, through this crisis. We are going to focus on provisions that small business owners may be able to take advantage of during this time to maintain their cash flow and to help them retain their employees until the COVID-19 crisis subsides. First, the CARES Act expands the existing U.S. Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL) program which offers disaster loans to businesses affected by federally declared disasters. While typically a federally declared disaster is centered around one area (example Hurricane Katrina), COVID-19 is widespread affecting the whole country and U.S. territories. The CARES Act allows any business effected by COVID-19 to apply for one of these low-interest loans and allows businesses to get an advance on the loan to help them immediately while the loan is being processed.
The CARES ACT also introduced a new temporary loan program under the SBA 7(a) loan program. This program is called the Paycheck Protection Program (PPP) and it is designed to offer government-backed loans to small businesses, that may be forgiven in whole or in part, to bolster their cash flow so they can continue to meet their payroll needs and retain employees through the COVID-19 crisis. The CARES Act allocated $349 billion dollars to this program. These loans are available now and are offered on a first-come, first-serve basis.
Finally, the CARES Act added some tax credits and deferrals of existing loans for businesses as additional relief during this uncertain time. Again, we will go into more detail in the upcoming blogs regarding these loan programs for small businesses and additional tax benefits.
At Family Estate Planning Law Group, we know this is a difficult time for everyone. Things are changing rapidly, and everyone is being flooded with an abundance of information. The provisions in the CARES Act are designed to provide some financial relief. We at Family Estate Planning Law Group care about keeping our clients updated with important information that may affect their families and their estate plan.
To learn more about how we can help you take care of your family, visit our website, explore our blog, and schedule your complimentary consultation today!