COVID-19 / CARES Act FAQs

Questions and Answers Posted Daily - Last Updated 04/29/20

The CARES Act (2)

The CARES Act is the third stimulus bill passed into law in response to the COVID-19 pandemic. CARES stands for the “Coronavirus Aid, Relief, and Economic Security Act.”

Major provisions include:

  • Paycheck Protection Program (PPP)
  • Economic Injury Disaster Loan Program (EIDL)
  • Pandemic Unemployment Assistance Program (PUA)
  • Multiple Other Unemployment, Tax, and Related Programs

As part of the CARES Act, the initial $349 billion dollar allocation for the Paycheck Protection Program ran out of money in just 13 days, and was then given $320 billion in new funding on April 24, 2020. As of this writing, the program is still open.

Category: The CARES Act

On April 24, 2020 a new bill was signed into law that sent more money to the PPP, EIDL, and other causes. Here is the breakdown.

There were $484 billion total issued in this bill:

$321 billion for Paycheck Protection Program

$60 billion for Economic Injury Disaster Relief Advance program

$75 billion for hospitals

$25 billion for testing

Economic Injury Disaster Loan (EIDL) (3)

The Economic Injury Disaster Loan program is a type of loan granted by the Small Business Administration. It pre-dated the CARES Act. However, the CARES Act did create a new provision that allows for an “up to” $10,000 advance on an EIDL loan. This is also know as a “grant” since if you are not approved for the EIDL, you do not have to pay back the Advance.

While it was thought at the beginning of the program that the Advance would be $10k, the SBA came out with new guidance that the EIDL Advance would be calculated with this formula: $1,000 x (Number of Employees on January 31, 2020). This would be capped at the $10k. That means if you are a sole propriator, you would recieve $1,000.

The SBA announced a “Lapse in Appropriations” on April 15, 2020 and closed applications on that day. Even though an additional $60 billion was allocated to the EIDL Advance program on April 24, 2020, SBA has yet to open up applications for the EIDL Advances as of this waiting.

On April 24, 2020 a new bill was signed into law that sent more money to the PPP, EIDL, and other causes. Here is the breakdown.

There were $484 billion total issued in this bill:

$321 billion for Paycheck Protection Program

$60 billion for Economic Injury Disaster Relief Advance program

$75 billion for hospitals

$25 billion for testing

Unemployment benefits are almost always personally taxable.

PPP and EIDL amounts are not generally subject to income tax.

Paycheck Protection Program (3)

On April 24, 2020 a new bill was signed into law that sent more money to the PPP, EIDL, and other causes. Here is the breakdown.

There were $484 billion total issued in this bill:

$321 billion for Paycheck Protection Program

$60 billion for Economic Injury Disaster Relief Advance program

$75 billion for hospitals

$25 billion for testing

Unemployment benefits are almost always personally taxable.

PPP and EIDL amounts are not generally subject to income tax.

As part of the CARES Act passed on March 27, 2020, a large amount of money is allocated towards a program known as the Paycheck Protection Program (PPP). In a nutshell, this program allows for a loan of 2.5x average monthly payroll which, if you use it for a few specified purposes (payroll, business rent, business utilities, etc.) will be FORGIVEN! Meaning you don’t have to pay the money back. Read that again.

Ok, so what’s such a big deal? Well, this program is open to all small businesses, 501(c)(3)’s, sole proprietors, and independent contractors — that’s right, sole-proprietors, freelancers, and IC’s? You are included in this too.

Unemployment Provisions (3)

As part of the CARES Act, a number of unemployment provisions and programs were created to assist the workforce. The Pandemic Unemployment Assistance (PUA) program is specifically designated for those who are not eligible for traditional state unemployment benefits such as independent contractors, sole proprietors, and other self-employed individuals.

Important to note: all unemployment benefits are paid through the STATES. Even though parts of these programs are federally funded and mandated, it is still the state unemployment office that will be implementing this program.

PUA offers up to 39 weeks of unemployment benefits. This is available through December 31, 2020 with an additional $600 / week on top of state benefits through July 31, 2020. The program also includes regulations implementing Disaster Unemployment Assistance (DUA). The weekly benefit amount is equal to amount under state law (subject to minimum DUA benefit). 

If you can get regular unemployment benefits, then you would not be eligible for this program (but you may be eligible for FPUC or PEUC). If you can telework or have paid leave, you are not eligible for PUA.

Unemployment benefits are almost always personally taxable.

PPP and EIDL amounts are not generally subject to income tax.

The CARES Act includes three major unemployment policies:

  • Pandemic Unemployment Assistance (PUA)
  • Federal Pandemic Unemployment Compensation (FPUC)
  • Pandemic Emergency Unemployment Compensation (PEUC)

Each provision is discussed further in the FAQ.

Work In Progress

We are in the midst of a critical time, and we here at Maddrey have been working hard to get the best information out to you in the best ways we can. This website is not complete, but instead of rolling it out in the future, we decided to make sure you could access our articles, webinars, and other information right now. Thank you all.