The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was passed into law on March 27, 2020 and is a significant tool for small businesses to utilize during the COVID-19 pandemic in the United States.
The CARES Act allocates $350 billion to assist small businesses keep their employees on the payroll and meet their expenses by way of a 100% federally guaranteed loan to businesses in the United States who meet certain criteria.
Most significantly, these loans apply to small businesses (fewer than 500 employees), a 501(c)(3) with less than 500 employees, along with sole proprietors, independent contractors, and a self-employed individual. It is important to note that the 500-employee requirement includes employees of any status (full-time, part-time, etc). In general, these loans are intended to be utilized for payroll costs, employee salaries (including other forms of compensation) and business expenses, such as utilities and rent.