How Small Businesses Can Benefit from the CARES Act?

The 116th U.S. Congress passed the Coronavirus Aid, Relief, and Economic Security Act, popularly known as the CARES Act, a $2.2 trillion economic stimulus package, and President Donald Trump signed it into law on March 27, 2020 in reaction to the COVID disease's negative economic effects.

Table of contents

  1. What is the CARES Act?
  2. What is a Paycheck Protection Program?
  3. How do I know if a PPP loan is right for my company?
  4. Government Assistance for Economic Losses Caused by Natural Disasters
  5. What is The Economic Injury Disaster Loan (EIDL)
  6. How COVID19 Affects Local Entrepreneurs?
  7. What was the need of the CARES Act?
  8. What are Most at-risk industries?
  9. When would it be a good idea for my business to apply for a disaster loan from the Small Business Administration?
  10. Global Epidemic Alert Benefits for the Unemployed
  11. What are Tax Changes and Credits?
  12. Key Takeaways

What is the CARES Act?

To mitigate the global coronavirus pandemic-induced economic downturn, U.S. lawmakers passed a $2 trillion stimulus bill in March 2020 called the CARES act. Most economists at the time predicted that the U.S. economy was already in, or about to enter, a recession, so policymakers passed landmark legislation to aid corporations large and small, industries, individuals, families, gig workers, independent contractors, and hospitals.

More than $2 trillion was spent on this rescue effort, making it the largest in American history. Comparison of the 2009 Recovery Act ($831 billion), the Consolidated Appropriations Act ($910 billion), and the American Rescue Plan Act ($1.9 trillion) reveals some striking differences.

Some of the loans and small business aid were still granted at the Treasury's or SBA's discretion, but they came with stringent conditions and were overseen by an inspector general and an oversight board appointed by Congress. The law set aside $130 billion for healthcare and another $130 billion for state and local governments to use in their fight against the pandemic, CARES Act.

What is a Paycheck Protection Program?

To help small businesses with payroll and other operating costs during the emergency, the law set aside $349 billion. The plan's stated objective was to continue paying workers and maintaining their positions through the crisis CARES Act.

Any company, nonprofit, veterans organisation, or tribal business with fewer than 500 employees qualified for the Paycheck Protection Program (PPP), as did any food service or lodging establishment with fewer than 500 employees per location, as determined by the Small Business Administration. Small Business Interruption Loans were available to qualifying businesses in amounts up to $10 million, which was 2.5 times the size of their average monthly payroll.

Payroll, benefits, salaries, interest, rent, and utilities could all be paid for with the loans. There was no need to provide collateral or personal guarantees, and no fees were charged. There were no prepayment penalties and a deferral period of six months to a year was available for monthly payments, CARES Act.

Payroll, mortgage interest, rent, utilities, and any additional wages paid to tipped employees made during the first eight weeks after origination may be applied toward principal. Any decrease in the average number of employees during the period would reduce this amount under PPP.

Small businesses, private nonprofits, sole proprietors, agricultural cooperatives, and employee-owned firms were also eligible to receive $10 billion in emergency grants that could be converted into advances on forgivable loans, CARES Act.

An additional $17 billion was set aside to cover the principal, interest, and fees on preexisting federally guaranteed small business loans for a period of six months. A total of one billion dollars was set aside for programme management, education, and training for these loan offerings, CARES Act.

How do I know if a PPP loan is right for my company?

PPP loans can be a great resource for small businesses in need of short-term financing to meet everyday expenses like rent and payroll. They have a low interest rate to begin with, and if you use the money to keep your staff paid and your rent or mortgage paid, the government might even write you a check to cover the rest (essentially turning it into a grant).

You can apply for both a PPP loan and an SBA disaster loan, but the funds from each loan must be used for different purposes. For example, you cannot use the funds from both loans for payroll support. For details on how to apply for either programme, please see the SBA's website, CARES Act.

Government Assistance for Economic Losses Caused by Natural Disasters

The Economic Injury Disaster Loan Emergency Advance programme was expanded to help small businesses hit by the COVID-19 pandemic get access to interest-free loans of up to $10,000. For EIDL loans, qualified borrowers could receive up to $200,000 with no collateral required, CARES Act.

Regular unemployment benefits for eligible workers were extended under the plan from the standard 26 weeks to as long as 39 weeks. Where it was not already the case under state law, it also allowed benefits to be paid during the first week of unemployment. In addition, it paid for the continuation of the regular unemployment benefit through the end of July 2020, as well as a new benefit of $600 per week called Federal Pandemic Unemployment Compensation.

However, the FPUC was updated and extended as part of the Continued Assistance Act in late December of 2020. There is now an extra $300 in weekly benefits available thanks to a change to the FPUC. There was money available for layoffs that started after December 26, 2020 and ended on or before March 14, 2021. In 2021, on September 5th, these benefits were no longer available, CARES Act.

With the COVID-19 crisis affecting many countries, the PPP aims to help small businesses keep their staff. To help small businesses with payroll and other operating expenses, the SBA's 7(a) loan programme will continue disbursing up to $659 billion in partially or fully forgivable loans between February 15, 2020 and December 31, 2020.

If, within the first 24 weeks after receiving a loan, at least 60% of the funds are used to pay payroll costs and no more than 40% are used to pay mortgage interest, rent, or utilities, the remaining balance of the loan will be forgiven, CARES Act.

What is The Economic Injury Disaster Loan (EIDL)

Small businesses that have taken a major financial hit as a result of the COVID-19 crisis can turn to the EIDL for help in the form of working capital loans. From January 31, 2020, through December 31, 2020, small businesses can get low-interest loans to cover things like payroll and other operating expenses and liabilities, CARES Act.

Borrowers can get up to $2 million in non-forgiving loans based on their demonstrated financial need and extent of economic damage. Advances of up to $10,000 for emergency economic injury grants (EEIG) are available from the EIDL Program and are not reimbursable.

The Paycheck Protection Program Flexibility Act of 2020 (PPPF Act) became law on June 8, 2020 to provide small businesses with additional time and leeway to retain employees and ensure their continued operations as the country gradually reopened in the midst of the COVID-19 crisis.

The Main Street Lending Program was established by the Federal Reserve as a result of the CARES Act to help small and medium-sized businesses that were in good standing prior to the COVID-19 outbreak get access to credit, CARES Act.

The Small Business Administration's EIDL programme used to help businesses rebuild after natural disasters by offering low-interest loans. If you happen to reside in a state that is prone to natural disasters such as hurricanes or flooding, you may be familiar with the Small Business Administration's disaster loan programme. The CARES Act increased funding for this programme, making it possible for COVID-19-affected businesses to qualify for these loans.

Payments on an SBA disaster loan are deferred for the first year and the interest rate ranges from 2.75 percent to 3.75 percent. All loans over $25,000 must be secured by some form of collateral. In order to qualify for a disaster loan from the SBA, you must submit an application to the SBA directly.

Administration can take more than 30 days to process. The SBA has made it easier for businesses to apply for funding by making the process available online. In addition, businesses applying for disaster loans can receive loan advances of up to $10,000, with the possibility of full or partial forgiveness of the advance amount. However, there are restrictions associated with these, so it is important to visit the SBA website for more information, CARES Act.

How COVID19 Affects Local Entrepreneurs?

It is anticipated that many small businesses and start-ups will fail as a result of social distance restrictions and health and economic driven demand shifts from COVID19, but there is very little early evidence on impacts. Using nationally representative data from the April 2020 Current Population Survey, this paper presents the first analysis of the pandemic's effects on the number of active small businesses in the United States.

In the two months between February and April of 2020, the number of American business owners fell by 3.3 million, or 22 percent. It was the largest ever decline in the number of businesses actively operating, and the effects were felt in virtually every sector of the economy. African-American owned establishments saw a disproportionately large 41% decline in business activity. There was a 32% drop in business owner activity among Latinx and a 26% drop among Asians.

The simulation results show that the industry compositions put these sectors at a greater risk of business activity losses. As much as 36% of business activity was lost by immigrant business owners. It had an especially negative impact on women who owned businesses (25 percent drop in business activity).

May and June data analysis showed a similar trend, with fewer people engaged in business ownership. This time, the decline was 15% and 8%, respectively. May and June's losses were felt by people of all ages and in the vast majority of industries, which had also felt some improvement in April. Important policy, income, and economic inequality implications stem from these findings of early-stage losses to small business activity.

The widespread closing of stores and businesses in the United States and around the world due to the coronavirus is unprecedented. Because of government regulation, declining demand, health and safety concerns, and other factors, many stores and factories have shut down, CARES Act.

Many of these businesses may never reopen because their owners cannot afford to keep up with the costs associated with running the business while it is closed. Globally, this will have a devastating effect on local businesses of all sizes.

Because of a lack of timely business-level data release by the government, it is unclear what early effects COVID19 has had on small businesses and entrepreneurs. In this paper, we remedy this shortcoming by extrapolating data on business owners from the monthly microdata files of the Current Population Survey (CPS).

The CPS records the business owner's current occupation and whether or not they are actively running the company. As a result, the data can reveal the total number of proprietors, but it cannot reveal whether the closures are temporary or permanent, CARES Act.

However, if the COVID19 induced recession continues for an extended period of time, many of the inactive business owners are likely to permanently shut down their businesses. Business owners face a problem regardless of how long their establishments are closed due to the pandemic.

Alarmed findings emerge from analyses of patterns by gender, race, and immigration status. The greatest number of black business owners were lost, 41%. About a third of Latinx business owners shut down between February and April of 2020 due to losses. There was a significant decrease in entrepreneurial activity among immigrants (36%), and among women business owners (25%).

This paper builds on those research results by examining the effects of COVID19 in the months following the nationwide implementation of shelter in place mandates in May and June of 2020. If you were wondering if more small businesses closed or if there was a partial rebound as owners tried to reopen, this analysis will tell you of CARES Act.

The results show that the numbers in May 2020 were up slightly from April 2020, and they rose even further in June 2020. When comparing February 2020 to May 2020, business activity dropped by 15%, but then recovered by 8% in June 2020 thanks to another rebound in the number of active business owners of 5%.

What was the need of the CARES Act?

Disproportionate effects of COVID19 persisted into May and June, as evidenced by patterns according to race, ethnicity, and immigration status. African Americans continued to suffer the highest rates of business owner turnover, with 26% of their population losing their livelihoods in May and 19% in June, CARES Act.

Also suffering heavy losses were Latinx business owners, with 19% inactive in May and 10% in June. There was a significant drop in business activity among immigrant entrepreneurs of 25% in May and 18% in June.

With the exception of agriculture, most major industries saw significant drops in the number of active business owners in April. The number of people actively running businesses in the building and plumbing trades, the food and lodging industries, the transportation industry, and the personal and laundry service trades all dropped significantly as a result of the spread of COVID19.

To sum up, the first estimates of COVID19's effects on small businesses from the April 2020 CPS show that losses were widespread across demographic groups and types of businesses; no sector was safe from the ill effects of socially distant policy mandates and demand shifts, CARES Act.

And yet, they also show signs of improvement across the board. Each month of inactivity has an effect on revenues, profits, and employees, even if it is impossible to know for sure whether or not the businesses will reopen, CARES Act.

These findings expand upon the data from a small number of related studies that examined the initial effects of the coronavirus on U.S.-based small businesses. U.S. Census weekly Business Formation Statistics (BFS) data shows a 27% drop in employer business applications during the five weeks between mid-March and mid-April compared to the same period last year (Wilmoth, 2020).

Recent BFS data suggests a recovery, though weekly estimates show substantial volatility (U.S. Census Bureau, 2020). About half of businesses have seen a significant negative impact from the COVID19 pandemic, according to estimates from the weekly U.S. Census Small Business Pulse Survey, and only about 15% to 20% have enough cash on hand to cover 3 months of operations (Bohn, Mejia, & Lafortune, 2020; U.S. Census Bureau, 2020).

A new weekly survey confirms that falling demand is more of a problem than challenges related to material and product supply (Desai & Looze, 2020). Towards the end of March, Alignable business network members (nearly 6,000 in total) were surveyed by Bartik et al. (2020). The majority of businesses have less than one month's worth of cash on hand, and 43% of those that are open are closed temporarily, CARES Act.

Eighty-six percent of the 224 high-revenue Latinx-owned businesses surveyed by the Stanford Latino Entrepreneurship Initiative (2020) reported immediate negative effects, such as delayed projects and closures, as a result of the pandemic.

This paper expands upon earlier research by analysing CPS data for April through June and examining whether there are any distinguishing effects for female, minority, or immigrant business owners. This information could be useful for directing government assistance toward keeping small businesses alive and thriving, which in turn would help keep people employed.

What are Most at-risk industries?

The overall vulnerability of small businesses can be better understood by plotting the effects of COVID-19 against the already existing financial risk. There are 1.7 million small businesses, which together employ 20 million people and generate 12 percent of US business revenue; these are the sectors hardest hit by the coronavirus and the least financially resilient.

These industries may continue to bear the brunt of a prolonged COVID-19 crisis, increasing the likelihood that additional businesses in the sector will be forced to close permanently. The longer the pandemic persists, the more widespread its potential effects, CARES Act.

More than two million small businesses compete in industries like construction and manufacturing, where fewer companies are reporting negative effects from the pandemic but where financial resilience is lower.

Risks to these industries increase the longer the economic effects of COVID-19 last. A prolonged recovery, combined with relatively low resilience, could create significant vulnerability in the construction industry, for example, in the future.

When the degree of vulnerability in each industry is known, the magnitude of the challenge faced by small businesses in the first few months of the crisis becomes more apparent. Half of small businesses that see a large negative effect from COVID-19, according to these owners, may be forced to shut down. One study found that a moderate negative effect could put an additional 25% of small businesses at risk of failure.

The extent to which various industries have been impacted by COVID-19 and the likelihood that affected businesses will close down determine these variations (Exhibit 3). Small businesses in general, not just those in sectors like restaurants and hotels, which face well-documented difficulties, feel the pinch, CARES Act.

Other small businesses in the fields of education, medicine, and social work are doing the same thing. Due to the difficulty of physically isolating students, many private preschools, after-school programmes, sports leagues, and art studios could be at risk. Similarly, ambulatory care facilities (like dentist offices) and other small private practises that patients may be hesitant to visit in person are also feeling the pinch.

About three-quarters of clothing stores and one-third of grocery stores reported significant declines in business as of May 23 within retail. This discrepancy is most likely due to differences in the types of businesses that were considered essential and thus allowed to remain open. Discrepancies between subsectors in other industries may be influenced by temporary drops in demand, CARES Act.

Apparel manufacturers are among the hardest hit manufacturers, with 71% reporting a significant negative impact due to the pandemic's effect on the retail clothing industry. But only about a fifth of the electric equipment and appliance producers say it has a major negative effect on their business.

Utilizing a dataset of financial statements from within the manufacturing sector, we found a similar pattern for financial resilience: prior to COVID-19, apparel manufacturers had a lower ratio of cash on hand to current liabilities than computer and electronics manufacturers, CARES Act.

When would it be a good idea for my business to apply for a disaster loan from the Small Business Administration?

Payroll, sick leave, mortgage or rent payments, or other pre-existing debt obligations may all be good candidates for a disaster loan. You have a year to get your business back up and running (and revenue coming in) before you have to start repaying the loan, as payments are deferred for the first year, CARES Act.

When compared to PPP loans, however, the interest rate on an SBA disaster loan is significantly higher (though still relatively low). You may have to wait a while for the SBA to approve your application and disburse the funds, even if you qualify for the advance grant on the disaster loan.

The CARES Act not only widened the availability of small business loans, but it also established a programme to help companies with their existing SBA debt (excluding disaster and PPP loans). The SBA will take care of the payments on your existing loan, including principal, interest, and fees, for a period of 6 months as part of this programme. To find out more about the debt relief programme, visit the SBA's website.

This programme can be very useful for companies that already have a 7(a) loan, 504 loan, or micro loan. It can be used to defer loan payments while COVID-19 has an effect on your business's revenue. Maximizing the money coming into your company is a top priority. Not having to worry about loan payments is a boon to your company's credit standing. You can also apply for a PPP loan or a disaster loan and take part in this programme.

Many U.S. businesses have had to lay off or furlough employees in recent weeks due to shutdowns and social distancing, as evidenced by the country's record-high unemployment rate.

If you've recently lost your job, the CARES Act guarantees you an extra $600 per week in unemployment benefits on top of what your state already provides. The CARES Act did not change the amount of money given to states for unemployment benefits, though some states have increased their payments.

As difficult as it is, a small business may consider furloughing or laying off employees as a last resort before closing its doors permanently. It is important to keep in mind that in order to receive loan forgiveness if you apply for a PPP loan, you will need to quickly restore staffing levels.

The CARES Act not only established a number of short-term financial aid programmes, but it also instituted a number of temporary tax provisions to aid businesses and individuals. The federal government was the first to take action by extending the filing deadline to July 15, and many local and state governments quickly followed suit.

Some of the other tax provisions in the CARES Act that are helpful to small businesses are as follows. The Internal Revenue Service website has details on all of the CARES Act's tax provisions.

In the event that COVID-19 has an impact on your business, you may be able to claim a payroll tax credit equal to 50% of your wage costs (plus some portion of employee health insurance). To qualify, businesses must either show that they were forced to close because of COVID-19 or that their revenues dropped by more than 50 percent. Payment periods beginning on or after March 13, 2020, and ending on or before December 31, 2020, are eligible for the tax credit.

Companies that are granted a PPP loan cannot claim this payroll tax credit. Consult your CPA or financial advisor to help you determine the best course of action for your company. Businesses that are affected by COVID-19 can also defer their payroll tax payments for up to two years. Each party is responsible for making a 50% down payment by the end of 2021 and a 50% up payment by the end of 2022, CARES Act.

Businesses that take out a PPP loan can now delay making payroll tax payments thanks to the Paycheck Protection Program Flexibility Act (enacted in June 2020). Get the opinion of your accountant or financial advisor before proceeding. The percentage that can be deducted for business interest expense has increased from 30% to 50%.

Businesses can deduct 30% of their adjusted taxable income plus any business interest expenses they incur. To put it another way, if your business has a mortgage or loan, those payments can be subtracted from income and the resulting tax bill for the company will be lower, CARES Act.

The CARES Act doubled the percentage above and beyond the standard deduction for business interest expense, from 30% to 50%. Consult the IRS website for details on deducting interest on business loans, and work with your accountant or financial advisor to ensure your company is making the most of the CARES Act's tax provisions.

Global Epidemic Alert Benefits for the Unemployed

Workers whose benefits had run out were able to receive 13 additional weeks of benefits under the CARES Act's Pandemic Emergency Unemployment Compensation (PEUC) programme. The Pandemic Unemployment Assistance (PUA) programme also included people who worked for themselves or as independent contractors.

The stimulus plan provided full funding for state short-term compensation benefits for workers who remained employed but with reduced hours, and incentives for states that did not have such benefits to implement them, CARES Act.

Due to the Continued Assistance for Unemployed Workers Act of 2020, the PEUC program's benefits, which were set to expire on December 31, 2020, have been extended to March 14, 2021. (or the Continued Assistance Act).

The bill was included in the Consolidated Appropriations Act (CAA), 2021, which was passed by Congress and signed into law by President Trump on December 27, 2020. In addition, people could extend their time on unemployment benefits by 24 weeks (versus the original 13 weeks under the CARES Act).

Once again, all unemployment benefits related to the pandemic ended on September 5, 2021, although some states did so earlier.

What are Tax Changes and Credits?

For Taxpayers

Reimbursements of $1,200 per adult and $500 per child were established as part of the coronavirus stimulus plan. Incomes over $75,000 for single filers, $112,500 for heads of household, and $150,000 for married couples will see the rebate amount decrease over time. It ordered the Treasury to expedite the transfer of funds.

The CARES Act also relaxed limits on charitable contributions and allowed taxpayers to take a $300 above-the-line deduction from adjusted gross income for charitable contributions, CARES Act.

Financial Aid for Retirement

To avoid paying taxes on withdrawals from tax-deferred retirement accounts, the plan allowed for special disbursements and loans of up to $100,000. RMD rules for 401(k)s and IRAs were suspended, along with the 10% early withdrawal penalty on withdrawals of up to $100,000 from those accounts, CARES Act. Over the next three years, account holders would be able to make catch-up contributions to their accounts to repay the distributions.

Everyone who was either sick or had financial difficulties as a result of the pandemic was eligible for these measures. Those who had a job offer withdrawn or delayed, as well as their spouses (even if they themselves were still employed), are now included in the group of eligible participants who can make these withdrawals, thanks to IRS guidance, CARES Act.

Business Owners

To encourage businesses to keep and pay their employees during any quarter in which operations were curtailed or halted due to the coronavirus, a new Employee Retention Credit (ERC) against employment taxes was established. Any company that had taken out a Small Business Interruption loan was ineligible for this rebate, CARES Act.

For 2020, payroll taxes for businesses will be postponed. Payroll taxes for the year 2020 will be due in equal instalments on January 1, 2021 and February 1, 2022. If your company incurs a loss in 2020, you can use that money to make up for it over the next five years. As of January 1, 2020, manufacturers of hand sanitizer will not have to pay excise taxes on the alcohol they use in their products.

Healthcare

The stimulus package included funds for both immediate medical care during the crisis and long-term care and prevention. The plan increased Medicare reimbursements, grants, and other direct federal payments to healthcare providers and suppliers by $100 billion.

It also allocated $27 billion for research and development of diagnostic tools, vaccines, and medical treatment devices, as well as the purchase of $16 billion to replenish the country's Strategic National Stockpile.

Important medical supplies, such as protective gear and medications to treat the coronavirus, were also ordered to be kept in stock and the supply chain coordinated between the federal government and industry.

As part of its stimulus package, the government loosened some laws, modified Medicare payment rules, and lowered drug approval requirements to better respond to the crisis. Specifically, it mandated that health insurance policies cover influenza diagnostics and research into potential cures and preventative vaccines.

There was an increase in funding for healthcare workforce training, education, and modernization programmes, and healthcare providers were shielded from liability when they volunteered to fight the pandemic across state lines.

Stabilization of the Economy

As part of the coronavirus stimulus plan, $500 billion was set aside for economic stabilisation loans and guarantees, which were specifically designed to provide liquidity to the hardest-hit businesses and industries.

To be managed by the Treasury Secretary, these funds were divided as follows: $25 billion for passenger airlines; $4 billion for air cargo carriers; and $17 billion for businesses deemed critical to national security. The remaining $454 billion went to Federal Reserve-run programmes and lending facilities for the benefit of other businesses, state and local governments.

There were, however, stipulations attached to any loans made by the Treasury under this programme. Stock buybacks, dividend payments, and labour force cuts of more than 10 percent were banned. Any and all Treasury loans required borrower equity or senior debt. These Economic Stabilization loans were not dischargeable like the Small Business Interruption loans.

Salary increases for employees earning over $425,000 per year were frozen, and severance packages were limited to two years' salary. Over-$3-million earners had their 2019 pay capped at $3.5 million, plus 50% of anything over $3.5 million.

The plan also authorised the Treasury to resume using the Exchange Stabilization Fund to provide emergency liquidity to money market mutual funds and loosened some capital requirements for banks and credit unions.

Large and Medium-Sized Companies and Airlines

This loan programme did not apply to businesses owned or controlled by the president, vice president, or members of Congress.

The terms of the loans stipulated that the airlines must keep flying to their already established routes and destinations. The 2020 budget bill eliminated the annual excise tax on air travel as well as the fuel tax. $32 billion was set aside to help airlines and contractors with payroll, on top of the loan programme.

Businesses with 500 to 1,000 employees were required to keep union contracts in place and refrain from outsourcing or offshore labour as a condition of receiving a loan.

Help with Rent and Mortgage Payments

It was the CARES Act, the first piece of coronavirus legislation, that put a halt to foreclosures and evictions. After having their expiration date extended multiple times, the CDC finally had their request denied by the Supreme Court on August 26, 2021.

But the Treasury's Emergency Rental Assistance Program can still provide some assistance. The National Low Income Housing Coalition's website features a searchable database of programmes that can help with housing costs, including mortgage and rent subsidies, CARES Act.

Money for State and Local Government Emergency Relief

The new Coronavirus Relief Fund provided up to $150 billion in aid to state and local governments. The federally administered territories received $3 billion, while tribal governments received $8 billion. Allotted funds were distributed to states and municipalities based on their relative population sizes. The costs of containing the pandemic and limiting the economic damage it caused were covered by these sizable, open-ended block grants.

Reserved Funding

Numerous industries, agencies, and special interest groups were vying for a slice of the funding pie, as one might expect from such astronomical federal spending. However, the CARES Act also included provisions that seemed unrelated to the COVID-19 pandemic at the time but were ultimately designed to help businesses in key congressional districts.

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Key Takeaways

To mitigate the global coronavirus pandemic-induced economic downturn, U.S. lawmakers passed a $2 trillion stimulus bill in March 2020 called the CARES act. Most economists at the time predicted that the U.S. economy was already in, or about to enter, a recession, so policymakers passed landmark legislation to aid corporations large and small, industries, individuals, families, gig workers, independent contractors, and hospitals.

More than $2 trillion was spent on this rescue effort, making it the largest in American history. Comparison of the 2009 Recovery Act ($831 billion), the Consolidated Appropriations, and the American Rescue Plan Act ($1.9 trillion) reveals some striking differences.

Some of the loans and small business aid were still granted at the Treasury's or SBA's discretion, but they came with stringent conditions and were overseen by an inspector general and an oversight board appointed by Congress. The law set aside $130 billion for healthcare and another $130 billion for state and local governments to use in their fight against the pandemic.

To help small businesses with payroll and other operating costs during the emergency, the law set aside $349 billion. The plan's stated objective was to continue paying workers and maintaining their positions through the crisis.

Any company, nonprofit, veterans organisation, or tribal business with fewer than 500 employees qualified for the Paycheck Protection Program (PPP), as did any food service or lodging establishment with fewer than 500 employees per location, as determined by the Small Business Administration. Small Business Interruption Loans were available to qualifying businesses in amounts up to $10 million, which was 2.5 times the size of their average monthly payroll.

Payroll, benefits, salaries, interest, rent, and utilities could all be paid for with the loans. There was no need to provide collateral or personal guarantees, and no fees were charged. There were no prepayment penalties and a deferral period of six months to a year was available for monthly payments.

The overall vulnerability of small businesses can be better understood by plotting the effects of COVID-19 against the already existing financial risk. There are 1.7 million small businesses, which together employ 20 million people and generate 12 percent of US business revenue; these are the sectors hardest hit by the coronavirus and the least financially resilient.

These industries may continue to bear the brunt of a prolonged COVID-19 crisis, increasing the likelihood that additional businesses in the sector will be forced to close permanently. The longer the pandemic persists, the more widespread its potential effects.

More than two million small businesses compete in industries like construction and manufacturing, where fewer companies are reporting negative effects from the pandemic but where financial resilience is lower.

It was the CARES Act, the first piece of coronavirus legislation, that put a halt to foreclosures and evictions. After having their expiration date extended multiple times, the CDC finally had their request denied by the Supreme Court on August 26, 2021.

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