The CARES Act was created to provide financial aid to individuals and businesses facing economic hardship due to the COVID-19 outbreak. The Paycheck Protection Program, implemented by the Small Business Administration (SBA) with the support of the Department of the Treasury, is one of the most important components of the CARES Act. This program offers loans to small and medium-sized businesses that were in good financial shape before the pandemic. The CARES Act also exempts certain businesses from SBA membership rules.
These include lodging and food service industries with 500 or fewer employees on the date the loan is disbursed, any commercial company operating as a franchise and that has received an SBA franchise identification code, and any company receiving financial assistance from a Small Business Investment Corporation (SBIC). The CARES Act 2.0 also created “specific EIDL grants” that prioritize companies most affected in low-income communities. In addition, businesses can take advantage of paid vacation credits by retaining and accessing funds that they would otherwise pay to the IRS in payroll taxes (including federal withheld income taxes, employee participation in Social Security and Medicare taxes, and employer participation in Social Security and Medicare taxes for all employees). An employee who is unable to work due to the need to care for a child whose school is closed or a child care provider is unavailable for reasons related to COVID-19, may receive up to ten additional weeks of extended paid family and medical leave. The CARES Act has been a great help for small businesses during this difficult time.
It has provided much needed financial assistance, as well as exemptions from SBA membership rules and paid vacation credits. It has also allowed employees to receive additional paid family and medical leave.