CARES ACT HIGHLIGHTS: Paycheck Protection Program and FFCRA Amendments


On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) into law. The CARES Act’s inspiration is planned for reducing the financial impact of the COVID-19 pandemic and stimulate the economy with a 2.1 trillion dollar implantation.

Cares Act

In addition to different things, the CARES Act amends Section 7(a) of the Small Business Act making the “Check Protection Program (the “Program”). The Program extends relief to a segment of small organizations than those that would otherwise be ineligible to get SBA 7(a) loan advances. The Program will apply retroactively from February 15, 2020, until June 30, 2020, below are a couple of highlights:

  • The Program covers nonprofit affiliation, veterans affiliation or tribal business with 500 workers or less; individuals who work under the sole proprietorship or as an independent contractor and eligible self-employed individuals; associations with a NAICS code beginning with 72; and certain foundations.
  • Covered loans can be used for payroll taxes, costs related to the continuation of group medicinal services benefits, employees pay, and commissions, interest payments on mortgage responsibilities, rent, utilities and interest on obligations incurred before the start of the program. A covered loan credit can also be used to refinance a loan taken out on or after January 31, 2020, and the date on which the “covered loan” opened up.
  • Generally, the maximum loan size is limited to the lesser of $10 million or 2.5 times the average total monthly payments for payroll costs during the date of the loan credit. Financial costs include salaries (excludes compensation of an individual worker above $100,000), wage payment, commissions, separation installments, installments for group health and retirement benefits, and installments of state or local work appraisals and pay.
  • The interest rate using a loan won’t exceed 4% percent. Moneylenders will give installment postponement to installments of the credit (inclusive of the principal amount, premium, and charges) for at least a half year and a maximum time of one year.
  • Recipients are qualified for forgiveness on a covered loan advance in a whole sum equivalent to the total spent on covered expenses during the eight-weeks after the credit is started. Those covered expenses incorporate payroll, rent, utilities, and mortgage interest duties. Loan forgiveness may be dependent upon a reduction if a business reduces either headcount or wages.
  • Borrowers must make a good faith certification that: (I) “uncertainty of current financial conditions” requires the loan; (ii) that funds will be used to retain workers and maintain payrolls other permitted uses; (iii) the recipient doesn’t already have a pending application for the same reason and duplicative of amounts applied for or got under a covered loan; and (iv) from February 15, 2020, to December 31, 2020, the recipient has not gotten amounts for the same reason under the Program.

The CARES Act also revises a couple of provisions of the FFCRA (Families First Coronavirus Response Act). I addition to different technical corrections the CARES Act made a couple of substantive changes to the FFCRA that organizations should know about:

  • Employers can choose to exceed budgetary limits for Paid Leave. The CARES Act changes the past language to state that a business “won’t be required to pay more than” the money limits set out in the FFCRA.
  • FMLA leave eligibility is extended for rehired employees. A rehired employee is qualified for paid FMLA leave when (I) they were laid off March 1, 2020, or later and (ii) they worked for the company for at least 30 of the 60 days before the layoff.
  • Employers can request the advance of anticipated tax-credits and refunds for paid sick and paid FMLA to leave.

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