However, the CARES Act will give significant assistance to small companies throughout the United States, but how will it relate to your organisation?
In response to COVID-19, the United States government has passed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which is a historic $2 trillion coronavirus relief bill. Its goal is to reduce the burden on the 31 million small enterprises that employ a total of 59 million people throughout the nation. Because of the coronavirus outbreak, small companies are under tremendous pressure to shut their doors and send their workers home. The CARES Act arrives at a critical moment.
The $2 trillion in funding was established to stimulate the economy and provide immediate, substantial relief and financial security to business owners who are experiencing coronavirus-related disruptions and who are struggling to retain their employees rather than laying them off as a result of the virus. Some of the provisions of the Act offer direct relief payments to many Americans; however, other sections include forgiven loans for company owners, deferrals and tax credits, as well as safeguards to protect both workers and employers in the event of unemployment. Here are four topics that employers should be aware of about the CARES Act and how it might influence their company:
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1-The CARES Act urges you not to lay off any of your workers unless absolutely necessary.
To be exact, one of its sections calls for the supply of $350 billion in loans to small enterprises (with less than 500 workers), sole proprietors, self-employed individuals, and nonprofit organisations, merely to meet the costs of rewarding your staff.
These loans were established to cover salaries as well as certain costs such as utilities, rent, and mortgage interest that occur between February 15th and June 30th of the following calendar year. It also permits small firms to get a refundable payroll tax credit, as well as delay some or all payroll taxes until 2020, in order to incentivize them to retain their workers on the payroll.
2– It may assist you in obtaining a loan of up to $10 million to help you recover from coronavirus-related interruptions in your operation.
A small firm that has been adversely impacted by COVID-19 may be eligible to borrow up to $10 million in order to make payroll and cover other obligations such as electricity and insurance, among other things. These loans may be up to the lesser of 2.5 times payroll or $10 million, with an interest rate of no more than 4% on the principal and interest. Additional to this, companies who apply for a loan will have the option to apply for loan forgiveness, which would allow them to have a part or all of their debt forgiven if they utilise the money to meet wages.
3 – Under the CARES Act, non-citizen workers may not have the same access to benefits as citizens.
Notably, the CARES Act excludes persons who are classified as “nonresident aliens,” and as a result, they are not eligible for the disaster relief monies that are available to workers who are citizens of the United States. The substantial presence test (which requires a non-US citizen to have been on US soil for 31 days of the current year and 183 days during the three-year period that includes the current year and the two preceding years) or possession of a valid green card are both required for non-US citizens to be eligible. If an employee does not fulfil any of these standards, he or she will be unable to utilise the relief monies made available under the CARES Act.
4-Employees who left their jobs because of a coronavirus-related illness may be eligible for unemployment compensation under the CARES Act, according to the CDC.
It is predicted that some people would abandon their positions in order to qualify for unemployment benefits that will become available as a result of COVID-19, despite the fact that this system was created to safeguard individuals who feel uncomfortable at their places of employment. These benefits are primarily determined by your state, but under the CARES Act, jobless persons may receive an extra $600 per week in Federal Pandemic Unemployment Compensation. Both of these options are accessible until July 31, 2020, even if an unemployed person has exhausted all other state-sponsored assistance.
While companies around the country are experiencing a slowdown, the Trump administration intends to keep the economy afloat by instituting protective measures to help small businesses remain open, workers continue on the payroll, and deliver relief payments to Americans of all socioeconomic backgrounds. The CARES Act was established to provide relief for Americans in a variety of circumstances; nevertheless, we hope that protective measures will be outlined to safeguard company owners from workers abandoning their jobs. When it comes to employers, the CARES Act may be utilised to assist you retain your workers, borrow the funds you need to keep your company running smoothly, and recuperate through this difficult time period.