How the CARES Act Helps Small Businesses

Topics: Coronavirus (COVID-19)

Lawmakers reached an agreement on the largest economic stimulus in modern history. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on Friday, March 27 and will deliver much needed economic relief to workers and businesses negatively impacted by COVID-19.

The CARES Act includes:
  • $301 billion for direct payments to individuals and families
  • $349 billion in small business loans
  • $250 billion in unemployment insurance benefits
  • $500 billion in loans to businesses
  • $150 billion for state, tribal and local governments
  • $340 billion in supplemental spending, including $117 billion for hospitals and veterans' care
  • $221 billion in tax benefits for businesses
The CARES Act will offer help directly to small businesses and their employees through loans and enhanced unemployment benefits.

Small Business Resources 

The CARES Act offers a variety of programs and initiatives designed to assist small businesses during these uncertain times. These programs and initiatives include:

Paycheck Protection Program (PPP) Loans

PPP Loans provide capital to cover the costs of retaining employees, such as for salary and wages, healthcare benefits, sick time, retirement benefits and more. Small businesses that are interested in applying for PPP Loans should contact an SBA Lender that they have an existing banking relationship with. Click here to learn more about PPP Loans. Unfortunately, as of April 16, 2020, the SBA announced that the $349 billion Congress allocated for PPP loans had been depleted. However, Congress passed a new bill on April 24, providing an additional $310 billion in relief for small businesses with $60 billion set aside for small lenders, another $60 billion in SBA disaster loans, $75 billion in grants for hospitals, and an additional $25 billion to increase testing for COVID-19. These funds became available on April 27.

On June 5, the Payment Protection Program Flexibility Act was signed into law to address some of the concerns small business owners had about the initial program. The PPPFA includes:
  • Changes the amount of the loan needed for payroll from 75% to 60% 
  • Extends the time period to use funds from 8 to 24 weeks, allowing businesses to have until the end of 2020 to use the funds
  • Pushes back the deadline to rehire workers from June 30, 2020 to December 31, 2020
  • Eases rehire requirements by extending the rehire date and providing additional exceptions for a reduced headcount
  • Extends the repayment term from two to five years in the event loans or portions of them are not forgiven

‚ÄčSmall Business Debt Relief Program 

Allows for forgiveness of a portion of PPP loans. SBA lender will forgive the principal amount that a lender reasonably expects a borrower will expend during the 8-week period beginning on the date of origination for the loan on the sum of certain (a) payroll costs, (b) mortgage interest, (c) rent obligations and (d) utility payments.

Economic Injury Disaster Loans (EIDL) and Emergency Economic Injury Grants (EEIG) 

Provide loans and grants to small businesses and private non-profits harmed by COVID-19.

Training and Counseling 

Resource partners such as local Small Business Development Centers, Women's Business Centers and Minority Business Development Agency’s Business Centers may receive extra funds to help support small business owners with free counseling and low cost training regarding COVID-19. 

While the stimulus bill is managed at a federal level, states are offering various coronavirus resources for small businesses as well. State governors continue to update the public each day, with announcements that are impacting both small businesses and the employees they serve.

To learn more or to apply for assistance, please visit the U.S. Department of Treasury’s website:, or review a sample application by clicking here.

The Next COVID-19 Stimulus Bill: The HEALS Act

A second stimulus plan is currently in the works to provide more relief to both individuals and small businesses impacted by the COVID-19 pandemic. Known as the Health, Economic Assistance, Liability Protection, and Schools Act (HEALS Act), the program would include the Continuing Small Business Recovery and Paycheck Protection Act, offering a second forgivable PPP loan to businesses that had at least a 50% reduction in gross revenues throughout the coronavirus crisis.

Unemployment Benefits for Workers

With small businesses experiencing business disruptions because of shelter in place orders and social distancing rules, many face difficult decisions when it comes to their workers. Millions of workers have already applied for unemployment benefits over the past few weeks. The stimulus package provides federal funding for expanded unemployment benefits coverage and increased benefits available to individuals whose job or ability to work was impacted by COVID-19.

The stimulus package expands unemployment benefits by providing:
  • An additional $600 in weekly benefits until July 31, 2020.
  • Up to 39 weeks of regular unemployment benefits for unemployment occurring between January 27 and December 31, 2020.
  • Benefits to workers who are not traditionally eligible, such as the self-employed or independent contractors (such as freelancers and gig workers). 
With $250 billion in funding for expansion of unemployment benefits, it's the largest increase ever.

‚ÄčAmTrust is Here for Our Small Business Insureds

AmTrust created a library of resources regarding the coronavirus and funding resources to help you small businesses, agents and others stay informed, safe and healthy. For more information about our small business insurance solutions, please contact us today.

This material is for informational purposes only and is not legal, tax or business advice. Neither AmTrust Financial Services, Inc. nor any of its subsidiaries or affiliates represents or warrants that the information contained herein is accurate, appropriate or suitable for any specific business, tax or legal purpose. Readers seeking resolution of specific questions should consult their business, tax and/or legal advisors. Coverages may vary by location. Contact your local RSM for more information.

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