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CARES H.R. 748

Important Information on CARES H.R. 748 - Passed 3/27/2020

Information for Small Businesses (Under 500 Employees) – Via the SBA

Section 1102 – Paycheck Protection

  • Allows for Loans of up to $10 million to cover employee labor, paid sick or medical leave, insurance premiums; mortgage interest, rent, and utility payments for small businesses (referred to as “7(a) loans). Note, small businesses can be corporations, partnerships, LLC’s, sole-proprietorships (including independent contractors).

  • The covered period is for expenses incurred for the period beginning on February 15, 2020 and ending on June 30, 2020.

  • For employees, self-employed persons, sole-proprietors, partners, and LLC members; maximum salary covered not to exceed $100, 000 annual (pro-rated to $8,333.33 per month for the  covered period for a maximum of $37,500). Amounts are based on prior period/year
    documented payroll (employees) and income (self-employed, partners, and LLC members).

  • Generally, banks and financial institutions will handle this financing with complete reimbursement from the SBA.

  • Loan amounts will be calculated using a factor (generally 2.5 times the prior year’s average payroll for the period 2/15/2019 through 6/30/2019). See Section 1102 (E) for exact language.


  • Covered Loans are non-recourse and no personal guarantee nor collateral is required if used for qualified purposes/expenditures.


  • No lender fees will be permitted. Borrower doesn’t need to prove credit available elsewhere.


  • Loan can be forgiven with no tax impact if certain conditions are met (See Section 1106).

  • Remaining portion not forgivable can have a maximum term of 10 years and in no instance can  the interest rate exceed 4%. In addition, repayment is to be deferred for a period not less than 6 months nor greater than 1 year.

Section 1106 – Loan Forgiveness


  • Covered Loan proceeds used to fund covered expenditures of the first 8 weeks of the loan can be forgiven with no tax impact (i.e. to debt cancelation will not be taxable).

  • Covered expenses include rent, utilities, telephone, internet, payroll costs, interest on covered debt (primarily installment obligations and mortgages in existence on or before 2/15/2020).

  • Amount that can be forgiven is based on the number of employees that are retained during the  period 2/15/2020 through 6/30/2020 as compared to the period 1/1/2020 to 2/29/2020 or to the period 2/15/2019 to 6/30/2019 (Act uses average number of full-time equivalent employees per month). Further reductions under Section 1106 (d)(3) are made if salary/wages are reduced to covered employees.

  • Re-hires within 30 days of enactment are exempted from the employee count. They are effectively considered retained (see Section 1106 (d)(5).


  • Note, can’t double dip (i.e. receive loan forgiveness and reimbursement under paid family and/or sick pay leave for Covid-19.

  • Maximum salary is $100,000 per annum (i.e. persons that were paid more than $100,000 per year are treated as if their remuneration was $100,000 per annum).


  • Record keeping is paramount to ensure forgiveness.


Section 1110 - Emergency EIDL (Emergency Injury Disaster Loans) Grants

  • Are available to eligible borrowers suffering from the economic impact of the Covid-19 pandemic and are unable to meet their obligations (i.e. not able to pay ordinary and necessary operating expenses). Grants/Loans are can be obtained by sole-proprietorships, partnerships, independent contractors, and LLC members in addition to Corporations.

  • Loan amounts in most situations are limited to one-half of the prior year’s gross profit not to exceed $500,000 in most instances.

  • Permissible uses are for working capital needs, including fixed debt payments, payroll, and AP.

  • Terms are up to 30 years at 3.75%. Underwriting guidelines are liberal with the ability to offer funds based on the borrower’s credit score without the need of tax returns, etc.

  • Loans over $25,000 will require collateral, and first year of principal and interest payments may be deferred. There is no fee to apply.


  • Loan application process is online via the SBA website ( Note, the website is running slowly during peak periods. Once the application is complete, the SBA is supposed to process loans within 3 to 5 business days and have funds available within 30 days via a lump sum deposit. Emergency grants of up to $10,000 are available within 3 days of receipt of a completed application.

CLICK HERE for more information on the PPP Borrower Information Fact Sheet.

Information for Individuals

  • Section 2104 - Enhanced unemployment benefits of $600 per week for up to four months.

  • Section 2107 – Provides for up to an additional 13 weeks of unemployment benefits through 12/31/2020.

  • Section 2201 – Recovery rebates of up to $1,200 per person (not a dependent of another), and up to $500 per dependent child. Amounts phase out at $5 per $100 of AGI over $75K for single individuals, $112.5K for heal of households, and $150K for married couples (complete phase out for Single with AGI of $99K or more and married couples with AGI of $198K).


  • Section 2202 – Special Rules for use of retirement funds. Allowed to withdraw up to $100K for coronavirus-related purposes (taxpayer or spouse contracts the virus or taxpayer experience adverse financial consequences as a result of the virus … see 2202 (a)(4)(A)). Income from the withdrawal to be picked up over three years, and can be repaid (put back into the account) within the same three-year period. No 10% penalty would apply. This applies only to withdrawals under this provision occurring in calendar year 2020. Qualified plan loans for hardship increased from $50K to $100K.

  • Section 2203 – Temporary relief from Required Minimum Distributions from certain Retirement Accounts. Calendar year 2020 required minimum distributions have been suspended for one year.

  • Section 3513 – Temporary Relief for Federal Student Loan Borrowers. Payments under Part D and Part B of title IV of the Higher Education Act of 1965 have been suspended until 9/30/2020 without any interest accruals or impact on credit.

Additional Information for Businesses

  • Section 2301 – Employee Retention Credit for Employers. Employers shut down by Covid-19 crisis (fully or partially). Credit is provided for the first $10K of compensation, including health benefits paid to an eligible employee, and is refundable. Available for wages paid or incurred from 3/13/2020 through 12/31/2020. Cannot double dip on this and other provisions. If loan taken under Section 1102 of this Act, not eligible for this credit.

  • Section 2302 – Employers can delay payment of employer’s portion of social security tax (6.2%), and if self-employed, half of the self-employment tax attributable to social security. This is not eligible to payroll and taxes repaid under Section 1102 and amounts forgiven under Section 1106 of this Act. The taxes deferred under this provision must be repaid half in calendar year 2021 and half in calendar year 2022. The effective date is for taxes incurred from 3/27/2020 through 12/31/2020.

  • Section 2303 – Modifications of Net Operating Loss Rules for Corporations. Generally, allows for a 5-year carryback of losses for tax years beginning in 2018, 2019, and 2020 without a taxable income limitation.

  • Section 2304 – Modifications of Net Operating Loss Rules for non-Corporate Taxpayers. Excess business loss limitations relaxed for calendar years 2020 through 2025.

  • Section 2307 – Technical Amendments Regarding Qualified Improvement Property. Error in 2017 law corrected to allow bonus depreciation on this class of property.

  • Subtitle C – Labor Provisions – Have not changed since recent legislation effective 4/1/2020 regarding paid family leave, and emergency paid sick leave.

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