As we continue to grapple with the deadly COVID-19 and the many health-related issues surrounding it, there are also economic side effects that are painful for workers, investors, and retirees alike. To help offset the financial pain associated with closed businesses and reduced paychecks, the federal government passed the Coronavirus Aid, Relief, and Economic Security Act (a.k.a. the CARES Act).

Today, we will highlight some of the act’s provisions that will help put money in the hands of individuals, businesses, municipalities, and healthcare facilities during this difficult time.


Checks in the hands of individuals, in the form of tax rebates or enhanced unemployment, can be very powerful in this time of need. These payments will be used by the most vulnerable to pay for rent/mortgage, food, medicine, and other essential needs. This money will likely be spent quickly for immediate needs.

Relief for Workers Affected by Coronavirus Act

  • Pandemic Unemployment Assistance
    • Extends unemployment benefits to those not normally eligible for unemployment such as self-employed workers, independent contractors, and those with limited work history
  • Extended Unemployment Compensation
    • An additional $600 per week of unemployment benefits per filer through July 31, 2020
    • 13 additional weeks of unemployment—people nearing the maximum number of weeks allowed by their state would receive an extension

Recovery Rebates for Individuals

  • A $1,200 refundable tax credit per adult ($2,400 for joint tax filers)
    • The full payment will be made to all individuals with an adjusted gross income (AGI) of less than $75,000 or less than $150,000 for joint filers
      • Partial payments are available for those earning between $75,000–$99,000 or $150,000–$198,000 for joint filers
      • Determined based on 2019 tax return, if filed; otherwise 2018 tax return
    • Eligible recipients with children will receive an additional $500 per child

Individual retirement plan flexibility.

A few small provisions were added to the act to help those with retirement accounts. The first waves required minimum distributions for many plans. This provision is beneficial for those who would prefer not to sell investments at depressed prices. The second will allow some leniency in withdrawing funds from retirement plans for emergency purposes.

Temporary Waiver of Required Minimum Distribution Rules

  • No required distributions for 401(k), 403(b), 457(b), and Individual Retirement Accounts (IRA)

Special Rules for the Use of Retirement Funds

  • Up to $100,000 of coronavirus-related distributions may be withdrawn from eligible retirement accounts and subsequently repaid during a three-year period
  • Increased limits and flexibility on loans from qualified employer plans


Small businesses.

Small businesses are extremely vulnerable at this time, as many of them have been told to close their doors and keep their employees at home. Significant spending in the CARES Act is focused on keeping employees on the payroll, providing a lifeline to businesses that need help paying rent, servicing debt, and staying solvent until operations can resume.

Paycheck Protection Program

  • There is $350 billion allocated for the Small Business Administration to provide loans of up to $10 million per business
  • Any portion of that loan used to maintain payroll, keep workers on the books, or pay for rent, mortgage, and existing debt could be forgiven, provided workers stay employed through the end of June
    • Compensation of an individual employee in excess of an annual salary of $100,000 is excluded

Employee Retention Credit for Employers Subject to Closure Due to COVID-19

  • 50% refundable payroll tax credit on wages up to $10,000 per employee paid during the crisis
    • Businesses subject to full or partial closure are eligible
    • Businesses suffering a 50% decline in gross receipts are also eligible

Emergency EIDL Grants

  • $10 billion of Economic Injury Disaster Loan (EIDL) Grants
    • Grants of up to $10,000 to provide emergency funds for small businesses to cover immediate operating costs

Subsidy for Certain Loan Payments

  • $17 billion of relief for existing loans
    • Six months of payments (including principal, interest, and any associated fees) for small businesses already using Small Business Administration (SBA) loans will be paid by the administration


Significant assistance is available for the aviation industry that has ground to a halt. Like other measures in the act, a focus on employee wages was at the forefront. Keeping money flowing to households is essential to prevent panic and additional deterioration of the economy.

Pandemic Relief for Aviation Workers

  • Financial assistance to preserve aviation jobs and compensate air carrier industry workers, to be used exclusively for the continuation of payment of employee wages, salaries, and benefits
    • $25 billion for passenger air carriers
    • $4 billion for cargo air carriers
    • $3 billion for contractors

Big business.

Relief to big business is much different than it was in the economic relief package of 2008. This time, the focus is on keeping the debt markets functioning properly to avoid having a health crisis turn into a financial crisis. 

Emergency Relief and Taxpayer Protections

  • $500 billion of loans, loan guarantees, and other investments in support of eligible businesses, states, and municipalities
    • $25 billion of loans and loan guarantees for air carriers to inspect, repair, replace, or overhaul services, and ticket agents
    • $4 billion of loans and loan guarantees for cargo air carriers
    • $17 billion of loans and loan guarantees for businesses critical to maintaining national security
    • $454 billion to the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system that supports lending to eligible businesses, states, or municipalities
      • Direct purchases of bonds (new issuance)
      • Purchases of bonds on the secondary market (existing bonds)
      • Making loans (including loans or other advances secured by collateral)
    • The Federal Reserve has the ability to leverage the $454 billion under the authority of Section 13(3) of the Federal Reserve Act, significantly increasing the size of its lending pool into the trillions

Borrowing Authority for the United States Postal Service

  • Up to $10 billion of loans to the postal service for operating expenses (excluding the repayment of existing debt)


State and local government.

Help for state governments and other municipalities will be essential as they attempt to pay for added needs of medical facilities, staff, and other first responders. This is all coming at a time when tax revenue will be declining due to reduced sales and income tax receipts.

Coronavirus Relief Fund

  • $150 billion to states, tribal governments, and units of local government to help offset expenditures
    • Necessary expenditures incurred due to the public health emergency
    • Expenses not accounted for in the budget most recently approved
  • Payments to states are based on population with a minimum amount of $1.25 billion per state


Public health.

Significant funds for the Public Health and Social Services Emergency Fund have been allocated to help respond to the coronavirus. Money can be spent developing countermeasures and vaccines; purchasing vaccines, therapeutics, diagnostics; and for other medical supplies.

Public Health and Social Services Emergency Fund

  • $27 billion to remain available until 9/30/22 to prevent, prepare for, and respond to coronavirus, domestically or internationally
  • $100 billion of additional funds to remain available until expended for the same purpose as above


While not highlighted in this post, there are clearly some negative provisions and political handouts contained in this bill as is typical for many bills passed in Washington. In addition, the price tag of $2.3 trillion is mind-blowing at a time when our national debt already exceeds $23.5 trillion. Despite these detractions, the CARES Act has been seen by the financial markets and Main Street USA as a positive step forward to help put cash in the hands of individuals and businesses in their time of need.



This publication contains general information that is not suitable for everyone.  All material presented is compiled from sources believed to be reliable. Accuracy, however, cannot be guaranteed.  Further, the information contained herein should not be construed as personalized investment, financial planning, or legal advice.  The views and opinions expressed are those of the author and are subject to change with market conditions and the legal environment. © April 2020 JSG