Why You Should Care About the CARES Act

What began as a small healthcare tax repeal act introduced into the House by a Democrat on January 24, 2020 became, in a few weeks’ time, the single largest economic package in American history. But the CARES Act is far bigger and more comprehensive than Obama’s 2009 recession package. Signed by the president on March 24^th, it is now the law of the land—as well as an indicator of things to come.

But as with many things, the devil is in the details. So I thought I’d lay them all out for our readers. I’ve spent considerable time researching it, trying to understand the ins and outs of what it offers, and what I see is a range of strategic opportunities for businesses and individuals as well as a kind of window into our collective future. No matter what the arguments out there may be regarding Covid-19, the fact is that whether we find a vaccine tomorrow or next year, whether we reopen the economy on May 1st or December 31st, the economic impact we’re experiencing now will surely linger long after the virus is gone. The best way to protect against that, of course, is to take advantage of the supports offered in the various stimulus packages, more of which are already on deck in Congress.

A note: since most people know about or have already actually received the $1200 stimulus, I’ve left details on individual cash benefits out of this summary.

The Benefits 

Small Business Protections

• $350 billion in federal guaranteed SBA 7a loans to businesses with under 500 employees
• Maximum loan is $10 million and allows deferred payment of social security
• Loans are sized according to monthly payroll, rent, and utilities and will be forgiven as long as no employees are laid off

Applying for the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program have proven decidedly challenging. That said, the programs were expanded to cover more applicants and they will almost certainly continue or be further expanded under additional stimulus packages. If you need this money but have been discouraged by the execution, you should still apply as soon as possible.

Distressed Industry Protection

• $454 total in business loans, loan guarantees, and the Federal Reserve’s lending facilities
• $500 billion the Economic Stabilization Fund, for which nearly all companies are eligible
• A total of $29 billion for cargo and commercial air carriers
• $17 billion for private-sector businesses critical for national security

These provisions lacked specific targeting of many other distressed services industries, such as the hotel and restaurant industries, which are at once the hardest hit as well as some of the biggest employers in the nation. The hospitality industry has reached out for more tailored provisions and it is likely that more industries will be targeted in future packages.

Unemployment Expansion

• A Pandemic Unemployment Assistance to help short-term and gig workers, formerly ineligible
• A general raise in unemployment pay of $600 per week for up to four months
• 13 extra weeks of additional unemployment pay

These provisions have allowed millions of near-poverty or part-time workers to receive benefits for which they would normally be ineligible. They have also assisted many more whose unemployment is entirely contingent upon the event of the pandemic. Yet there are representatives in state and federal government already remarking on the insufficiency of these measures, as economists are predicting that a second wave of millions more job losses may happen soon making the 13-week unemployment stimulus inadequate.

Healthcare System Support

• $130 billion to medical and hospital industries
• $27 billion for research and development of treatments
• $30 billion for school and university healthcare
• $48 billion for transportation
• $19 billion for Veterans Affairs
• $16 billion in additional funding for the Supplemental Nutrition Assistance Program (SNAP)

The law does not provide aid to individual patients with large hospital bills as a result of a Covid-19 illness recovery. As of this writing, there is a forth package in the legislature right now that is pushing for an additional $450–600 billion for hospitals and other businesses.

Student Assistance

• A $14 billion higher education emergency relief fund
• Students have new flexibility on requirements for Federal student aid during the pandemic
• Through September 30, 2020, payments, garnishments, tax refund interception, and interest accrual on all student loans are suspended

Current students and college graduates with debt have received some important support here regarding loan attainment, repayment, work study payment, and healthcare clemencies and funding.

The Takeaway: A Door Left Open for Future Legislation

The good news is the stimulus packages, though flawed in execution, seems to be working. And more funding in the form of business loans and support is also on the way.

While I encourage any business owner to examine and apply for the benefits available in the 2020 CARES Act, anyone will do well to keep in mind that progress is currently slow and that other packages are already in the works. If you’re in dire need of the forgivable loan, it’s important to apply right away despite the delays, since your place in line will determine access to future stimulus funding down the line.

It’s not clear what, exactly, additional packages will look like, but they will be similar or even more dramatic. Despite the historic size of this stimulus package, it has fallen short in some fairly crucial areas. Yet most in the business seem to be maintaining optimism about future access to additional supports.

If you want to learn more about the business world during the pandemic, please sign up for the TopRight blog and follow me @TopRightPartner! And if you want insights on marketing and branding connect with me on LinkedIn or buy a copy of my latest book, Marketing, Interrupted.