Friday, April 3, 2020 –  By Anthony Novak and James Kaminski – As a result of Coronavirus Aid, Relief and Economic Security Act – the “CARES Act,” the global pandemic caused by the COVID-19 virus has caused Congress to enact emergency legislation to provide economic relief to businesses and individuals.   Newby, Lewis, Kaminski & Jones, LLP, attorneys, are carefully monitoring the provisions of the CARES Act as well as assisting clients with providing guidance on navigating the numerous and sometimes overlapping federal emergency programs relating to the CARES Act.


The CARES Act provides small business with assistance to cover short term operating expenses while providing an incentive for businesses to retain their employees.  Loans are available through banks that are guaranteed by the Small Business Association (“SBA”) and the federal government.  A business should apply directly with their bank so long as they are an eligible lender.  Highlights of the Paycheck Protection Program (“PPP”) are as follows:

  1. The eligibility period commenced with the enactment of the legislation on March 28, 2020. The loans will be available through June 30, 2020.  As of the date of this writing, the banks are still receiving the formatting for processing of loans, but it is anticipated that loan applications will be available with most lenders by April 1, 2020.
    • Eligibility.  Businesses with fewer than 500 employees, including not-for-profits, are eligible to apply for Payroll Protection Program loans.  Businesses must have been in operation on February 15, 2020.
    • Loan Size. The loan size is an amount equal to 250% of the business’ average monthly payroll costs measured by the period of February 15, 2019 to June 30, 2019.  If a business was not operating in 2019, the loan is capped at 250% of the average monthly pay costs between January 1, 2020 and February 29, 2020.
    • Use of PPP Funds. Small businesses can use the loan funds to pay payroll costs, interest on mortgage obligations, rent, utilities and certain other business debt.  The use of loan funds for payroll are limited to employees with a salary of $100,000 or less.  The PPP also allows use of loan funds for costs relating to group healthcare and retirement benefits.
    • Loan Forgiveness. A key element of the PPP is that the principal amounts of loans for the first eight (8) week period from the loan approval date may be forgiven if a business can document that the loan was used for the intended purpose of the Program and that the business retained its employees and maintained compensation levels of at least 75% of the prior year’s compensation.
    • Use for Other Purposes. If the loan funds are used for general operating purposes not relating to payroll, rent or utilities, the term of the loan will be a maximum of ten (10) years at a maximum interest rate of 4% with interest and principal deferred for the first six (6) months of the loan.
    • Eligible Lenders. All SBA 7A lenders are eligible to be lenders for the PPP.


The Act also provides a refundable payroll tax credit up to 50% of wages paid by effected employers to employees during the COVID-19 crisis.  The credit is available to employers whose:

  1. Operations were fully or partially suspended due to a COVID-19 related shutdown order; or
  2. Gross receipts decline by more than 50% when compared to the same quarter in the prior year.


The Act also provides for low interest long term loans of up to $2,000,000 known as “Economic Injury Disaster Loans”. These loans will be administered by the SBA so a business would apply directly with the SBA. This program also has a component known as an “Emergency Economic Injury Grant” whereby a business may receive an advance of up to $10,000 on the loan within three days of applying for the Disaster Loan. The $10,000 advance does not need to be repaid.


Before applying for any relief or for a loan under any of these programs, be sure that your lender is aware as to whether or not your business has availed yourself of any other relief related to the Coronavirus.  For instance, a PPP loan will not be forgiven to the extent that an employer takes a payroll credit for employees who have received leave due to the Coronavirus.   Also, a business may not use a Disaster Loan and a PPP loan for the same purpose, such as for payroll.


  • Individuals may receive up to a maximum of $1200 and married couples $2400 plus $500 per child for incomes up to $75,000 for single filers and $150,000 for joint filers. Thereafter, the amounts paid will be reduced with single filers in excess of $99,000 and joint filers in excess of $198,000 receiving no recovery rebate.
  • Individuals can make withdrawals from retirement plans without a 10% early withdrawal penalty if used for Coronavirus related purposes.
  • Required minimum distributions from most retirement accounts have been eliminated for calendar year 2020.
  • Individuals may deduct up to $300 of charitable contributions whether or not they itemize.

The attorneys at NLKJ are happy to answer questions regarding these various programs.