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A Summary of the CARES Act and What it Could Mean for Your Business



Key Components of the CARES Act for Employers


By Douglas Hand and Marc Reiner


The Senate has approved a highly significant economic stimulus program entitled the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The House of Representatives plans to pass this legislation using a voice vote on May 27 as many members are currently in their districts. This process, however, requires unanimous approval in order to pass and it is unclear whether that approval exists or whether members will need to return to the Capitol to convene a session to discuss the bill.

If the Act passes, it contains several notable features for employers being affected by the economic downturn caused by the coronavirus pandemic.

Lending Program

  • The Treasury Department can provide $500 billion in loans, loan guarantees, and investments.  Within 10 days after the act is passed, the Secretary of the Treasury will publish application procedures and minimum requirements for loans, loan guarantees, and investments.
  • That specifically includes $25 billion for passenger air carriers, $4 billion for cargo air carriers and $17 billion for businesses that work in national security. The rest of the funds, $454 billion, are given wide latitude to provide loans to businesses, states and municipalities.
  • The measure includes restrictions on businesses that receive loans. Those businesses may not issue dividends for up to a year after the loan is no longer outstanding, and must retain 90% of employment levels as of March 24, “to the extent practicable,” through September 30. The loans also cannot last longer than five years.
  • There’s a specific provision in the program for direct loans to mid-sized businesses, defined as between 500 and 10,000 employees, as well as non-profit organizations, where no payments will be due for the first six months after the loan is issued.
  • Businesses taking advantage of these loan agreements are required to limit executive compensation until one year after the loan is paid off.


Boost for unemployment benefits

  • The federal government would give jobless workers an extra $600 a week for four months on top of their state benefits, which range from $200 to $550 a week, on average, depending on the state.
  • In addition, lawmakers want to add up to 13 weeks of extended benefits, which would be fully covered by the federal government. Currently, state unemployment checks last up to between 12 weeks and 28 weeks, depending on the state.
  • These benefits are available to employees who are temporarily furloughed by their employers.


Protections against foreclosures and evictions

  • The bill includes housing protections against foreclosures on mortgages and evictions for renters.
  • The bill states that anyone facing financial hardship from coronavirus shall be given a forbearance on a federally backed mortgage loan of up to 60 days, which can be extended for four periods of 30 days each. The legislation says that servicers of federally backed mortgage loans may not begin the foreclosure process for 60 days from March 18.
  • The bill also does not allow fees, penalties or additional interest to be charged as a result of delayed payments. It includes similar protections for those with multifamily federal mortgage loans, allowing them to receive a 30-day forbearance and up to two 30-day extensions.
  • Those with federally backed mortgage loans who have tenants would not be allowed to evict tenants solely for failure to pay rent for a 120-day period, and they may not charge fees or penalties to tenants for failing to pay rent.


Tax Benefits

  • The bill provides an employee retention credit for businesses subject to closure or with significant loss of revenue due to COVID-19.
    • Employers can take a credit against employment taxes for 50 percent of the employee’s wages for each employee retained, not to exceed $10,000 per quarter.
  • The deadline for making payroll taxes has been extended.
  • Prior legislation limited the amount of taxable income a net operating loss could offset to 80%. The CARES Act restores that level to 100% for 2018, 2019, and 2020.


Additional stimulus or coronavirus relief packages are expected to be issued in the weeks and months to come. If you have any questions or would like to discuss these issues, please feel free to reach out to Douglas Hand ( or Marc Reiner ( at HBA.




Douglas Hand’s practice is focused on fashion and retail companies and includes corporate and commercial issues. He advises many brands on general counsel matters impacting their businesses and is one of the preeminent fashion lawyers in the nation.


Marc Reiner’s current practice includes General Commercial Litigation; the registration of trademarks; litigation and counseling in the areas of trademarks, copyrights, false advertising, cybersquatting, and violations of the rights of privacy and publicity.