COVID-19 CARES Act Information
The Small Business Owner’s Guide to the CARES Act
The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was just passed by Congress are intended to assist business owners with whatever needs they have right now. When implemented, there will be many new resources available for small businesses, as well as certain non-profits and other employers.
Please see the CARES Act Title-By-Title Summary for an overview of the appropriations including the CARES Act.
Information provided below outlines the major programs and initiatives that will soon be available from the Small Business Administration (SBA), as well as some additional tax provisions that are outside the scope of SBA.
To keep up to date on when these programs become available, please stay in contact with your local Small Business Administration (SBA) District Office:
Baltimore District Office
SBA District Office
100 South Charles St. suite 1201
Baltimore, MD 21201
Find the complete Small Business Owner’s Guide to the CARES Act from the US Senate Committee on Small Business and Entrepreneurship. The document includes Frequently Asked Questions related to each resource.
Senator Van Hollen has also created a one-stop-shop website for Coronavirus issues to give Marylanders the information and resources they need to protect themselves from Coronavirus Disease 2019 (COVID-19).
Paycheck Protection Program (PPP) Loans
The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy snap-back quicker after the crisis. PPP has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees, and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.
Small Business Debt Relief Program
This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
Counseling & Training
If you, like many small business owners, need a business counselor to help guide you through this uncertain time, you can turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support small business owners with counseling and up-to-date information regarding COVID-19. There will soon be a joint platform that consolidates information and resources related to COVID-19 in order to provide consistent, timely information to small businesses. Find a local resource partner.
In addition, the Minority Business Development Agency’s Business Centers (MBDCs), which cater to minority business enterprises of all sizes, will also receive funding to hire staff and provide programming to help their clients respond to COVID-19.Not every state has a MBDC. To find out if there is one that services your area, visit this site.
If you are a government contractor, there are a number of ways that Congress has provided relief and protection for your business. Agencies will be able to modify terms and conditions of a contract and to reimburse contractors at a billing rate of up to 40 hours per week of any paid leave, including sick leave. The contractors eligible are those whose employees or subcontractors cannot perform work on site and cannot telework due to federal facilities closing because of COVID-19.If you need additional assistance, please reach out to your local Small Business Development Center, Women’s Business Center, SCORE chapter, or SBA District Office. You should also work with your agency’s contracting officer, as well as the agency’s Office of Small and Disadvantaged Business Utilization (OSDBU).
Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship
This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis. Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer full-time employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave (IRC sec. 45S).
Delay of Payment of Employer Payroll Taxes
This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability.
The Workforce Assistance Guide to the CARES Act
The below information comes from the National Employment Law Project’s Fact Sheet Unemployment Insurance Provisions in the Coronavirus Aid, Relief, and Economic Security (CARES) ACT. Please reference the Fact Sheet for additional information.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. A nearly $2 trillion economic stimulus package, the Act provides an estimated $260 billion in enhanced and expanded unemployment insurance (UI) to millions of workers throughout the country who are being furloughed, laid off, or finding themselves without work through no fault of their own because of the COVID-19 pandemic and our public health response to it.
The CARES Act creates three new UI programs: Pandemic Unemployment Compensation, Pandemic Emergency Unemployment Compensation, and Pandemic Unemployment Assistance. All three programs are fully federally funded.
The three UI programs are detailed below, as well as “short-time compensation,” laying out what benefits are available to workers who find themselves without any or enough employment or work in these difficult times.
Pandemic Unemployment Compensation (PUC)
From the date the bill is signed through July 31, 2020, all regular UI and Pandemic Unemployment Assistance claimants will receive their usual calculated benefit plus an additional $600 per week in compensation. PUC is a flat amount to those on UI, including those who are receiving a partial unemployment benefit check. PUC also goes to those receiving the new Pandemic Unemployment Assistance program described below. PUC may be paid either with the regular UI payment or at a separate time, but it must be paid on a weekly basis. PUC is not income for purposes of eligibility for either Medicaid or CHIP.
Pandemic Emergency Unemployment Compensation (PEUC)
The CARES Act also provides an additional 13 weeks of state UI benefits, which will become available after someone exhausts all their regular state UI benefits. All but eight states offer 26 weeks of UI benefits. To receive PEUC, workers must be actively engaged in searching for work. The bill explicitly provides, however, that “a State shall provide flexibility in meeting such [work search] requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”
PUC, PEUC, and Pandemic Unemployment Assistance (discussed below) are fully federally funded. States will also receive additional administrative funds to operate these programs.
Pandemic Unemployment Assistance (PUA)
Pandemic Unemployment Assistance (PUA) provides emergency unemployment assistance to workers who are left out of regular state UI or who have exhausted their state UI benefits (including any Extended Benefits that might become available in the future). Up to 39 weeks of PUA are available to workers who are immediately eligible to receive PUA. The program will expire on December 31, 2020, unless otherwise extended. Importantly, this program will provide income support to many workers who are shut out of the state UI systems in this country. In fact, workers who are eligible for state UI are not eligible for the PUA program. Those eligible for PUA include self-employed workers, including independent contractors, freelancers, workers seeking part-time work, and workers who do not have a long-enough work history to qualify for state UI benefits.
Applicants will need to provide self-certification that they are (1) partially or fully unemployed, OR (2) unable and unavailable to work because of one of the following circumstances:
- They have been diagnosed with COVID-19 or have symptoms of it and are seeking diagnosis;
- A member of their household has been diagnosed with COVID-19;
- They are providing care for someone diagnosed with COVID-19;
- They are providing care for a child or other household member who can’t attend school or work because it is closed due to COVID-19;
- They are quarantined or have been advised by a health care provider to self-quarantine;
- They were scheduled to start employment and do not have a job or cannot reach their place of employment as a result of a COVID-19 outbreak;
- They have become the breadwinner for a household because the head of household has died as a direct result of COVID-19;
- They had to quit their job as a direct result of COVID-19;
- Their place of employment is closed as a direct result of COVID-19; or
- They meet other criteria established by the Secretary of Labor.
Workers are not eligible for PUA if they can either telework with pay or are receiving paid sick days or paid leave. Unfortunately, workers must be authorized to work to be eligible for PUA, meaning that undocumented workers will not qualify. The PUA program will run from January 27, 2020 through December 31, 2020. Workers will be eligible for retroactive benefits and can access benefits for a maximum of 39 weeks, including any weeks for which the person received regular UI.
Short-time Compensation (Work-Sharing)
Short-time compensation (STC), also known as work-sharing, programs help employers avoid layoffs by putting workers on part-time schedules with partial unemployment benefits to help make up for some of the lost income. Under the CARES Act, the federal government will fully reimburse states for all STC programs already in place that conform with the requirements of Section 3306(v) of the Internal Revenue Code. The Act also provides $100 million in grants to states to implement, improve, and promote STC programs. Find more information on STC programs in Maryland.
To Apply for Unemployment Insurance, visit the Maryland Department of Labor’s Division of Unemployment Insurance for an online application or telephone application. The CARES Act temporarily supplements UI benefit amounts and extends the duration of those benefits.