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The Coronavirus Aid, Relief and Economic Security (CARES) Act: An employer’s guide


The Coronavirus Aid, Relief and Economic Security (CARES) Act is the $2 trillion federal stimulus package you’ve heard about in the media. Known more commonly as the CARES Act, the legislation was signed into law on March 27, 2020, and went into effect immediately.

Designed to address the economic and health impacts of the COVID-19 pandemic, the law provides relief for small- and medium-sized businesses facing unprecedented challenges.

About the CARES Act

In a nutshell, the new law:

  • Gives eligible small and medium-sized businesses and certain nonprofits a vital infusion of funds needed to remain in business, keep workers employed and help to cover certain financial obligations.
  • Delivers a one-time payment to working individuals and married couples with adjusted gross income below certain levels to reduce financial distress
  • Earmarks loans for larger companies in deeply impacted industries – such as the airline industry – to help them stay afloat

Take a deeper, more comprehensive  look at the CARES Act with our recent webinar, “Opportunities for Small Businesses,” hosted by Insperity’s Tom Himmer, vice president of customer development.

For this blog post, we’ll focus primarily on sharing the broad outlines of the CARES Act’s potential impact on small and medium-sized businesses and nonprofits through the Paycheck Protection Program that authorizes up to $349 billion to shore up businesses and jobs.

It’s worth noting that the U.S. Small Business Administration (SBA) offers additional assistance through the Economic Injury Disaster Loan program. Also, the CARES Act established additional programs to help small businesses struggling with liquidity issues.

Please remember, too, that at the time of this writing, additional guidance and updates are continually being provided by federal agencies to assist in the understanding, implementation and administration of the various programs under the CARES Act.

Paycheck Protection Program

The centerpiece of the CARES act for businesses is the Paycheck Protection Program, and a loan application form is available here.


Qualifying businesses that have suffered significant disruption as a result of COVID-19 are eligible to receive a no-fee Paycheck Protection Loan (PPL).

Eligible small businesses generally include:

  • For-profit businesses with less than 500 employees, whether employed on a full-time, part-time or other basis
  • 501(c)(3) nonprofits

Note that Accommodation & Food Services businesses (NAICS code starting with 72) are allowed 500 employees per location.  In addition, if the business has more than 500 employees but meets the SBA’s industry-based “size standard” requirements for the applicable NAICS code, then the business is also eligible.

Please also note that any relationship with a professional employer organization (PEO) does not impact an employer’s eligibility for a loan under the Paycheck Protection Program.

These loans are non-recourse, require no personal guarantee and are unsecured (i.e., no collateral is required). The application form will require various good faith certifications, including that the loan is  necessary to support ongoing operations and that the funds will be used to retain employees and maintain payroll or make qualifying mortgage, lease and utility payments.

Loan forgiveness

A portion of your loan that you apply toward payroll and operational costs for the eight-week period after receiving the loan is eligible to be forgiven. As in, you don’t have to pay it back – but only if you use the money for qualifying reasons.  The SBA has determined, however, that no more than 25% of the forgiven amount may be for non-payroll costs.

Any loan amounts not forgiven will be carried forward as an ongoing loan with a term of two years and 1.0% interest rate, with all payments (principal and interest) deferred for 6 months (although interest will continue to accrue during the 6-month deferment).

Loan amounts

Loans are available in amounts up to 2.5 times average monthly “payroll costs” for the last 12 months up to annual rate of pay of $100,000 per employee. Loans may not exceed $10 million.

Payroll costs generally include payments for:

  • Salary, wages and commissions
  • Payment of cash tips or equivalent
  • Covered leave
  • Separation allowances
  • Group health care benefits, including insurance premiums
  • Retirement benefits
  • State or local taxes assessed on employee compensation

Payroll costs generally exclude payments for:

  • Compensation of an employee in excess of an annual salary of $100,000
  • Certain taxes imposed or withheld under the Internal Revenue Code
  • Any compensation to an employee whose principal residence is outside the United States
  • Qualified sick leave wages and family leave wages for which a credit is allowed under the Families First Corona Virus Response Act (FFCRA).

Loan process

Loans are available and serviced through existing SBA-certified lenders, including banks, credit unions and other financial institutions. If you need assistance finding a certified lender, reach out to your local SBA office.  The CARES Act directs the SBA and the U.S. Treasury to bring additional lenders into the program.

To expedite assistance to businesses, the goal is to seek a quick turnaround from application to disbursement.  

Please note that if an employer receives forgiveness of a PPL, that employer may not be eligible for other CARES Act programs.  For example, if an employer receives an PPL, the Employee Retention Tax Credit is not available to that employer.  In addition, if an employer receives forgiveness of an PPL, then the Payroll Tax Deferment option is not available to that employer.

CARES support for workers and their families

This law provides support to individuals, too, in the wake of the current crisis. Let’s take a brief look at how it may benefit your staff, you and your loved ones.

After all – and more than ever, putting people first is essential.

The CARES Act provides direct support to employees:

  • Individuals earning up to $75,000 in adjusted gross income will receive a maximum of $1,200.
  • Married couples filing taxes jointly and earning up to $150,000 in adjusted gross income will receive a maximum of $2,400.

These payments decrease as income increases.

Additionally, individuals or families will receive $500 for each minor child.

For this portion of federal CARES assistance, no action is required from you or your employees. The payments will be mailed to you (if you’re eligible) and your employees automatically from the U.S. Treasury.

Support for the road ahead

At Insperity, our experienced teams remain focused on finding ways that we can assist new and existing clients as they seek assistance under the CARES Act and other programs.

For instance, we’ve provided our clients a paycheck protection loan report to help calculate average monthly “payroll costs” required to secure the loans.  We’ve also provided other information to assist our clients getting their loans approved, and we continue to monitor the marketplace to provide additional support as necessary.  

Please check out our Covid-19 resource center on our website where we provide lots of great tools and resources to help our clients pursue this unprecedented relief.

New to the idea of PEOs and what a company like Insperity can do for your business, in good times and bad? Unfamiliar with the benefits of HR outsourcing?

We suggest the following blog posts:

For more information and updates specific to the coronavirus pandemic, please visit our COVID-19 resources page.