Summary of the Coronavirus Aid, Relief, and Economic Security Act

As of Friday, March 27, 2020 Congress passed, and President Trump signed into law, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) a $2 trillion stimulus package which provides a broad range of economic relief measures for individuals, businesses and industries affected by the COVID-19 pandemic.

The following is an overview of the key provisions of the CARES Act. For more details, please contact your Taft attorney, Jeffrey Schloemer or Neal Roach and continue consulting the Taft COVID-19 Toolkit, which is regularly updated.

Aid to Individuals

  • Recovery checks will be issued in amounts up to $1,200 for individuals, $2,400 for married couples and $500/child (phasing out after income threshold of $75,000 for single filers and $150,000 for joint filers, with a complete phased-out for single filers with incomes exceeding $99,000 and $198,000 for joint filers).
  • Unemployment compensation benefits in an amount equal to $600 per week, in addition to any existing state benefits, for up to four months. The CARES Act provides an additional 13 weeks of unemployment benefits through December 31, 2020 for those who remain unemployed after state unemployment benefits are no longer available.
  • The Fair Credit Reporting Act is revised so that furnishers of consumer credit and payment information who make an accommodation with respect to one or more payments on a consumer’s account or credit obligation, must report the account or obligation as “current,” unless it was delinquent prior to the accommodation.

Aid to Businesses

  • The Secretary of the Treasury is authorized to make up to $500 billion in loans, loan guarantees and other investments in support of air carriers and other eligible related businesses, states and municipalities. The term of the loans is up to five years, and includes certain restrictions such as prohibiting equity security buybacks, paying dividends and terminating employees.
  • The CARES Act will provide $562 million to cover administrative expenses and program subsidies for the U.S. Small Business Administration (SBA) Economic Injury Disaster Loans and small business programs. Additionally, the CARES Act authorizes $349 billion for the SBA 7(a) program through December 31, 2020.
  • The CARES Act has many provisions related to SBA lending programs for current borrowers, the creation of a new Paycheck Protection Program, express loans and modifications to disaster loans.
  • Small businesses can receive a loan for up to $10 million to retain workers and maintain payroll. The loans are fully guaranteed by the federal government through December 31, 2020 and will be forgiven for the amount spent on payroll costs for the eight weeks following their origination.
  • The CARES Act provides a temporary moratorium on foreclosures and evictions as well as mandatory forbearance requirements for properties involving federally granted or guaranteed mortgages.
  • Financial institutions are temporarily relieved from requirements to report troubled assets and expected credit losses and there is a temporary easing of restrictions on lending by credit unions.
  • A refundable payroll tax credit is applicable to employers subject to closure due to COVID-19 for 50% of wages paid by employers to employees during the COVID-19 crisis and the payment of those employers’ share of Social Security taxes on employee wages is delayed and can be paid proportionately over the following two years, e., 2021 and 2022.
  • Net operating losses arising in tax years 2018-2020 can be carried back five years and can be used to offset 100% of taxable income. Additionally, the 30% business interest deduction limitation under Internal Revenue Code §163(j) is increased to 50% for 2019 and 2020, and certain costs associated with qualified improvement property can be expensed immediately.
  • Qualifying small businesses and minority-owned businesses may apply for financial assistance in the form of grants to cover training and advising for employees on risks of and mitigation of cybersecurity threats in remote customer service or telework practices.

Government Contracts

  • Federal agencies will share approximately $340 billion in new emergency funds to combat COVID-19. Agencies must continue to follow competitive procurement requirements to ensure fair and reasonable prices (e., the Federal Acquisition Regulations), although some requirements are relaxed for specific agencies, and with respect to certain advanced biomedical research and defense awards. 
  • New contracting opportunities are expected in response to appropriations. Example areas include the Strategic National Stockpile ($16 billion to procure personal protective equipment, ventilators and necessary medical supplies to enhance U.S. based manufacturing capabilities and medical surge capacity), as well as for the Department of Defense’s Defense Production Act and Defense Working Capital Funds ($2.45 billion for emergency response purchases, to support production lines, supply chain, access to supplies and to stock military depots and labs).
  • Federal agencies will have the ability to modify contracts to allow for the reimbursement of certain employee and subcontractor costs incurred to keep employees and subcontractors in a state of ready when to access government facilities or telework was unavailable due to COVID-19 closures and restrictions.

Health Care

  • The CARES Act addresses shortages in medical supplies, drugs and devices through actions to secure the supply chain and to streamline product reviews.
  • The CARES Act attempts to increase access to health care for COVID-19 patients through increased private and public payment coverage for services and expanded options for delivery of health care services (including telehealth).
  • The CARES Act attempts to provide more flexibility in Medicare spending. Significantly, the Medicare sequester, which reduces payments to providers by 2%, is lifted from May 1, 2020 through December 31, 2020, thus boosting payments for hospital, physician, nursing home, home health and other care.
  • The CARES Act also provides additional health care facility and program funding and creates health care workforce initiatives.


  • Temporarily increases the debt cap from $2,725,625 to $7,500,000 for eligibility to be a “small business” debtor with streamlined procedures and easier plan confirmation requirements under Chapter 11 of the Bankruptcy Code.
  • Excludes coronavirus-related payments from the federal government from the definition of “income” for purposes of determining eligibility to be a debtor under Chapters 7 and 11 of the Bankruptcy Code.

Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.

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