The Federal CARES Act and You
The government recently approved a $2.2 trillion relief bill to help aid with the effects of COVID-19 on our economy. The relief bill is called the CARES (Coronavirus Aid, Relief and Economic Security) Act. This bill will help millions of people in this critical time.
This sweeping legislation is unprecedented in the history of our nation and provides significant economic assistance to address the impact of COVID-19. The CARES Act is over 800 pages long, but here are some of the economic provisions most relevant for you.
For Individuals – Recovery Rebates
Most individuals earning less than $75,000 can expect a one-time cash payment of $1,200. Married couples would each receive a check and families would get $500 per child. That means a family of four earning less than $150,000 can expect $3,400.
- $75,000 for a single return;
- $150,000 for a joint return; and
- $112,500 for a head of household return:
- $99,000 for a single person with no qualifying child;
- $198,000 for a couple filing a joint return with no qualifying children;
- $218,000 for a couple filing a joint return with two qualifying children;
- $146,500 for a single parent with one qualifying child:
- in all cases,the level of income before the phase out is complete increases by $10,000 per child.
- For limitation purposes, AGI is based on the 2019 tax return, if filed. If not, then AGI on the 2018 return would be the limit.
For People who lost their Job or Can’t work Right Now
- Self-employed individuals, independent contractors, and other individuals who are unable to work as a direct result of COVID-19 public health emergency, and would not qualify for regular unemployment benefits under state law may be eligible to receive “Pandemic Unemployment Assistance.”
- This excludes individuals who have an ability to telework with pay or individuals who are receiving sick leave or other paid leave benefits
- The unemployment assistance is available to individuals who are unemployed, partially unemployed, or unable to work for the weeks impacted as a result of COVID-19 between Jan. 27- December 31, 2020.
- These benefits will be administered by the states, in accordance with this new Federal law.
- There is a maximum of 39 weeks of assistance, where the amount is equal to what is authorized under the state unemployment compensation law, plus an additional $600 per week for up to four months.
- Mortgage Forbearance – Borrowers of government-backed mortgages ((Fannie Mae, Freddie Mac, HUD, VA and USDA) can request up to 360-day payment forbearance without proof of hardship. No additional fees, interest, or penalties can be assessed for the forbearance. Except for abandoned or vacant property, there may be no foreclosure actions for 60 days from 3/18/2020.
- Owners of multifamily properties who were current on their mortgage payments as of February 1, 2020, and have federally insured, assisted, or supplemented loan (Fannie Mae, Freddie Mac, FHA or any loans backed or assisted by any branch of the federal government, including LIHTC) may request forbearance for 30 days due to financial hardship, with extensions of up to a total of 90 days. Borrowers receiving the forbearance may not evict or charge late fees to tenants for the duration of the forbearance period.
- Moratorium on eviction filings, or fees or penalties for tenants for nonpayment of rent for 120 days on properties insured, guaranteed, supplemented, protected, or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program, covered by the Violence Against Women Act of 1994.
For Small Businesses – Economic Injury Disaster Loans (EIDL) and 7(a) Payroll Protection Plan
Emergency Economic Injury Disaster Loan (EIDL) Grants (Section 1110)
- Businesses with 500 employees or fewer, including sole proprietors, independent contractors, and cooperatives are eligible for Economic Injury Disaster Loans (EIDL) during the covered period of January 31st to December 31, 2020 in response to COVID-19.
- The business must show hardship due to the Coronavirus.
- During the covered period, SBA can determine loan eligibility based solely on the applicant’s credit score or use of an alternative appropriate method for determining an applicant’s ability to repay.
- The SBA must waive any personal guarantee on loan advances or loans under $200,000.
- Economic Injury Disaster Loans may be used for the following:
- Paid sick leave to employees impacted by COVID-19
- Rent/Mortgage Payments
- Debt obligations due to loss revenues
- Increased costs for due to chain supply disruptions and materials
SBA 7(a) Payroll Protection Program (Section. 1102 & 1106)
- Businesses with 500 employees or fewer, including sole proprietors and independent contractors, are eligible for SBA 7(a) loans in response to COVID-19 covering expenses for the period of February 15, 2020 through June 30, 2020. The CARES Act appropriates $349 billion to cover these loans.
- The loan amount will be 250% of the average salary expenditures/month for the year prior to the loan, up to $10 million. For businesses not open yet in that period, the SBA will look at earlier receipts from 2020.
- 7(a) loans can be used for:
- Payroll, including for independent contractors and employees who work on commission;
- Rent/Mortgage interest;
- All or a portion of these loans will be forgivable for businesses that maintain at least 75% of the average payroll levels as in the previous year; forgivable amounts phase out as employers payroll levels drop below that.
For People with Student Loans
- Suspends all payment due on federal student loans for 6 months.
- Interest shall not accrue on these during this forbearance.
- For the purpose of loan forgiveness, loans will be deemed paid during the forbearance.
- Prohibits negative credit reporting or involuntary debt collection during forbearance period.