By Leigh Savage 

On Tuesday, March 31, the Greenville Chamber hosted Community Matters, a virtual federal response update featuring Charles Cogar, legislative director for Sen. Tim Scott, and Nick Myers, chief counsel for Sen. Lindsey Graham. They discussed the CARES Act and the ways it can assist businesses grappling with COVID-19. 

“This just became law at 5 p.m. last Friday, so this is moving lightning-fast for the federal government,” Cogar said. “Implementation is still unknown.”

“It is a very expensive, complicated bill that was written quickly and is still developing,” Myers added. 

The CARES (Coronavirus Aid, Relief and Economic Security) Act was the third phase of the federal response to the coronavirus, and Phase 4 is expected when Congress returns from recess April 20.

Here are a few key questions from Upstate business leaders and the responses of Cogar and Myers, who were involved in crafting the act. 

What is the CARES Act? 

Signed into law on March 27, the CARES Act is the third phase of the congressional response to the coronavirus pandemic.

It is a $2.1 trillion dollar bill drafted in the Senate with some changes made in the House, and it passed in a 96-0 vote. The act was designed to provide assistance to states, local governments, businesses and nonprofits in the quickest way possible. 

What does it include?

• Direct payment checks of up to $1,200 for individuals and $2,400 for married couples.

•  It also increased eligibility (freelancers, contractors) and funding for unemployment benefits. While unemployment used to top out at $362 per week, the new Emergency Pandemic Assistance runs for 16 weeks and can increase payments an additional $600 per week. Scott and Graham attempted to add a provision that would not allow people to make more in unemployment than they did at their job, but the vote was 48-48 and it did not pass. 

• Significant resources for hospitals, veterans care, FEMA and other medical spending totaling $340 billion, in part designed to address shortages of healthcare supplies

• An economic assistance mechanism at the Treasury similar to TARP, the $700 billion Troubled Asset Relief Program, passed in 2008 to inject money into the passenger airline, cargo and security sectors, among others. 

• A fund will send each state at least $1.25 billion, and some states will receive more based on population. 

• Paycheck Protection Program: On Friday, April 3, small businesses will be able to apply for an SBA loan designed to help businesses keep their workforce employed during the coronavirus pandemic.

Who is eligible to apply for the Paycheck Protection Program? 

Beginning Friday, small businesses with fewer than 500 employees can apply. Broad eligibility includes nonprofits, churches, and franchises with fewer than 500 employees at individual locations. 

How do I apply? 

Loan paperwork is now available, and small businesses can apply through any SBA 7(a) lender or a variety of community banks and credit unions.

How does the PPP help small businesses? 

Businesses receive a loan that covers eight weeks of payroll costs, including benefits. A portion of the funds can also be used to pay interest on mortgages and rent. If you use the funds for payroll and the other approved expenses, the loan becomes a grant that does not need to be paid back. It is capped at $10 million per business or 250 percent of an employer's average monthly payments for payroll costs. 

How are the loans forgiven? 

The loans are forgiven if used for payroll costs and interest on mortgages, rent and utilities, with at least 75 percent of the funds going to payroll. Forgiveness is based on maintaining employees and salary levels.

When can we get the funds? 

They are expected to be available in a few weeks. 

What about sole proprietors or independent contractors? 

They can apply for the Paycheck Protection Program beginning April 10. 

How does this program fit in with the SBA disaster loan program? 

The low-interest disaster loans were designed to pay debts, payroll, accounts payable and other bills and were capped at $10,000. The disaster loan was designed as a bridge to help businesses while the PPP applications are processed. Disaster loan funds will be subtracted from the paycheck protection loan to prevent double-dipping. 

Are employer contributions to 401(k) a benefit under the act? 

Yes. 

What about businesses with more than 500 employees?

The act includes loans for big business, which must be paid back, along with tax credits.