The CARES Act: Fast & Direct Government Assistance
- Posted: May 19, 2020
The CARES act was passed in March, 2020 to counter the economic impact of the pandemic and resulting economic shutdown. This historic act was designed to provide financial assistance for workers, small businesses, and industries to protect them from economic ruin. The government assistance programs contained in this Act cover mortgages, unemployment benefits, small business loans & grants, as well as student loans and income taxes. A significant portion of the American population stands to benefit significantly.
So, what does all this mean for you? Well, there are a number of provisions within the bill that benefit every day Americans. Have a read below determine which of these programs you are eligible for:
- Paycheck Protection Program (PPP) – whether you’re a small business owner or an employee of one, this provision allows businesses to borrow money from the government to cover their overhead, including payroll, rent, interest, and or utilities. These loans will be forgiven provided the business owner uses these funds for the aforementioned expenses, and does not reduce the average number of employees during the 8 weeks following the funding of the loan. For business owners, this is a great offering to help support their cash flows. For employees, this program provides increased job stability.
- The expansion of unemployment benefits (FPUC & PUA) – benefits are now extended to gig and freelance workers affected by the pandemic (FPUC program). Additionally, unemployed workers can now receive an extra $600/week added to their unemployment benefits through July 31 (PUA program). To see if you’re eligible for unemployment and this additional $600/week, visit your state’s unemployment website.
- After your state benefits run out, you’ll now be eligible for an additional 13 weeks of unemployment insurance (PEUC program). Provided you are able to and seeking work, and when you become unemployed, benefits could stretch through December 31st, 2020.
- Tax Credits – The CARES act has created additional tax credits for American families. $1200 per taxpayer plus an additional $500 per child. The amount of the rebate gradually reduces for households making over $75,000, $112,000, and $150,000 for individuals, heads of households, and joint filers, respectively.
- Penalty Free IRA borrowing – The CARES Act also allows for individuals to borrow up to $100,000 from their retirement accounts, penalty free. This borrowing would usually incur a 10% penalty. That penalty has been waived to allow individuals to access the needed funds required to keep them out of financial jeopardy.
- In addition to these individual benefits, the CARES Act also has programs for industries, larger corporations, and earmarked spending for the benefit of our overall communities.
- Mortgage Forbearance – You are entitled to mortgage forbearance (payment postponement) if you have a federally backed mortgage and you are having financial hardship due to the national emergency.
- Student Loans – Federally held student loans are now postponed and interest is being waived. The beauty of the program is that you don’t need to apply. The postponement is automatic. If you mistakenly made a payment after March 13th, you can request a refund from your servicer.
As you can see, the CARES Act is rather broad and all encompassing, and positively affects most Americans. It’s important that you educate yourself on these programs and make sure that you are taking every advantage of every one offered to you during these difficult times. To learn more about the CARES Act, visit: https://www.investopedia.com/coronavirus-aid-relief-and-economic-security-cares-act-4800707.
Additionally, more legislation is in the works, so make sure you are keeping current with progress in Congress.