Legal Disclaimer The information contained herein is for general guidance purposes only. It should not be taken for, nor is it intended as, legal advice. We would like to stress that there is no substitute for customers making their own detailed investigations or seeking their own professional advice if they are unsure about the implications of the Coronavirus Aid, Relief, and Economic Security Act (or CARES Act) on their businesses. While we have made every effort to ensure that the information provided herein is correct and up to date, Sage makes no promises as to completeness or accuracy and the information is delivered on an “as is” basis without any warranties, express or implied. Sage will not accept any liability for errors or omissions and will not be liable for any damage (including, without limitation, damage for loss of business or loss of profits) arising in contract, tort or otherwise from the use of or reliance on this information or from any action or decisions taken as a result of using this information. Frequently Asked Questions 1. What is the CARES Act?The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, responds to the COVID-19 (coronavirus disease 2019) outbreak and its impact on the economy, public health, state and local governments, individuals, and businesses. This stimulus bill includes tax provisions for businesses and individuals, provisions impacting employment and labor laws, provisions related to the small business administration, and provisions related to debtors. 4. My business has 500 or fewer employees. Can my business benefit from the CARES Act?The CARES Act provides for $349 billion to be used to guarantee loans to small businesses and other entities that have 500 employees or less. The primary purpose is to help organizations keep their employees on the payroll between now and the end of June 2020. Hence, the name of the program: Paycheck Protection Program (PPP). This loan program will be administered by the Small Business Administration (SBA). Specific requirements associated with typical SBA loans, such as guarantees, collateral, and a “credit available elsewhere” underwriting, have been relaxed or eliminated. A borrower under a covered loan can have a portion of the principal of the loan forgiven in an amount equal to payroll costs, mortgage interest, rent, or utility costs during the eight-week period following the origination of the loan. As part of the tax provisions for businesses, a refundable payroll tax credit for 50 percent of wages paid by employers to employees during the COVID-19 crisis is available to employers whose operations were fully or partially suspended due to a COVID-19-related shutdown order or whose gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. In addition to other benefits for businesses, employers and self-employed individuals can defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government concerning their employees. 6. I work for a private non-profit or a veteran organization. Could my organization benefit from the CARES Act?The CARES Act provides for $349 million to be used to guarantee loans to small businesses with less than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organizations or 501(c)(19) veterans organizations affected by coronavirus/COVID-19. The main purpose is to help organizations keep their employees on the payroll between now and the end of June 2020. Hence, the name of the program: Paycheck Protection Program (PPP). This loan program will be administered by the Small Business Administration (SBA). 7. Can my employees benefit from the CARES Act?The CARES Act includes enhanced unemployment benefits to provide payment to those not traditionally eligible for unemployment benefits who cannot work as a direct result of the coronavirus public health emergency. The bill also extends the duration of traditional unemployment insurance by 13 weeks. The one-week waiting period is also suspended under CARES. In addition to other benefits, the enhanced unemployment benefits pay 100 percent of the employer’s costs of providing short-time compensation through Dec. 31, 2020, where employers reduce employee hours instead of laying off workers, and the employees with reduced hours receive a pro-rated unemployment benefit.
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