Key Provisions

The CARES Act is a $2.2 trillion bill designed to address the economic fallout from the rapid spread of the coronavirus. The legislation is considered an unprecedented attempt by the federal government to hold up the economy and prevent a deep recession. By comparison, the 2008 Troubled Asset Relief Program (TARP) was a $700 billion bill.

The bill is intended to have a far-reaching effect by directing money toward workers, small businesses, and industries that have been harmed by the economic downturn related to COVID-19.

Below is a list of key provisions in the bill.

Direct Cash Payments

  • Provides recovery checks to most taxpayers, providing cash immediately to individuals and families.
  • Individuals are eligible for checks up to $1,200 and married couples filing jointly are eligible for checks up to $2,400, with an extra $500 for each child.
  • People with no income or only Social Security income are eligible.
  • To ensure the relief is focused on those who need it most, eligibility for recovery checks is reduced starting at $75,000 in income for individuals and $150,000 in income for joint filers.
    • Individuals with income exceeding $99,000 and joint filers with income exceeding $198,000 are ineligible.
  • Eligibility is based on 2019 tax returns, or 2018 returns if the 2019 return has not yet been filed.

Emergency Retirement Plan Withdrawals

  • Allows for no-penalty hardship withdrawals from 401(k)s and other retirement plans to help Americans access cash.
    • Waives the 10% early withdrawal penalty from a retirement plan and allows those who make withdrawals three years to return the money to their plan.
  • Loosens rules and raises limits for individuals who wish to take out loans against their retirement savings.
    • The bill doubles the current retirement plan loan limits to the lesser of $100,000 or 100% of the participant’s vested account balance in the plan.
    • Individuals who have outstanding loans from their plan with a repayment due from the date of enactment of the bill through December 31, 2020, can delay their loan repayments for up to one year.

Housing and Public Health

  • Provides assurances to Americans that their housing provides are taking positive steps to stop the spread of the virus by providing:
    •  $5 billion for Community Development Block Grants with additional flexibility to meet the needs of individual communities fighting this virus.
    • $1.25 billion in additional funding for Tenant Based Rental Assistance programs to assist more families in securing stable housing during this pandemic and help assisted households who may lose income during the outbreak.
    • $1 billion for Project Based Rental Assistance to assist Public Housing Agencies and property owners in preventing the spread of COVID-19 and helping residents who lose income due to the outbreak.
    • $300 million for Native American Housing Programs to help tribes provide housing for more individuals and prevent overcrowding in existing housing stock.

Protecting the Vulnerable

  • $4 billion for Emergency Homeless Assistance Grants that go directly to local governments to help provide shelter and basic facilities.
  • $685 million in emergency funding for local Public Housing Agencies to help prevent the spread of the virus in public housing.
  • $65 million to help prevent outbreaks for those who may be most affected by this virus, our nation’s elderly and disabled.
  • $65 million in additional funding for the Housing Opportunities for Persons with AIDS program, and the flexibility to use that funding and those units to assist families affected by COVID-19.

Protecting Homeowners and Renters from Foreclosure and Eviction

  • Prohibits foreclosures on any federally backed mortgages for 60 days.
  • Allows borrowers affected by COVID-19 to shift any missed payments to the end of their mortgage, with no added penalties or interest, for 180 days.
  • Halts evictions for renters in properties with federally backed mortgages for 120 days.
  • Gives relief to multifamily property owners through forbearance on any federally backed mortgage.

Unemployment Insurance

  • Provides approximately $250 billion to expand access to unemployment benefits.
  • Helps those not eligible for regular unemployment insurance:
    • Creates a new Pandemic Unemployment Assistance program to help those not traditionally eligible for UI – like the self-employed and independent contractors, like gig workers and Uber drivers – as well as those who are unable to work or telework as a result of the coronavirus public health emergency.
    • Provides funding to reimburse non-profits and government entities that are not part of the state unemployment system for 50% of the costs they incur through December 31, 2020 to pay unemployment benefits.
  • Provides an additional payment to each recipient:
    • Provides an additional $600-per-week payment to each UI or Pandemic Unemployment Assistance recipient for four months beginning April 1 through July 31, 2020.
  • Supports states that pay individuals quickly:
    • Provides funding for the first week of unemployment for states to waive the traditional “waiting week” before benefits begin.
  • Allows for additional weeks of unemployment benefits when needed:
    • Provides an additional 13 weeks of unemployment to help those who remain unemployed after weeks of state unemployment are exhausted.
  • Assists states in meeting critical staffing needs to get benefits out quickly:
    • Provides states with temporary, limited flexibility to hire temporary staff or re-hire former staff to quickly process unemployment claims.
  • Helps states maintain and establish programs to prevent layoffs during a downturn:
    • Provides funding to states to help them maintain short-time compensation programs to prevent layoffs, as well as expand those work sharing programs in the future.


Payment Protection Program and Loan Forgiveness

  • Provides $350 billion for 100% federally guaranteed loans for eight weeks of assistance to small businesses and 501(c)(3) non-profits.
    • Sole-proprietors, independent contractors, and other self-employed individuals are also eligible for these loans.
  • Loans can be forgiven when used for payroll costs, interest on mortgage obligations, rent, and utilities over an eight-week period.
  • SBA-certified lenders and non-SBA lenders are authorized to make Payment Protection loans.
    • All lenders participating in the Payment Protection Program, including banks, credit unions, and other financial institutions, will be moved to delegated authority which allows lenders to process loans quickly without SBA approval.
  • The Treasury Secretary is given the authority to work with the SBA to expedite the approval process and bring new lenders into the program.
  • Maximum loan amount for SBA Express loans, which require less documentation and less paperwork, is increased from $350,000 to $1 million through December 31, 2020.

Small Business Debt Relief

  • $17 billion in small business debt relief by requiring the SBA to pay all principal, interest, and fees on all existing SBA loan products for six months to provide relief to small businesses negatively affected by COVID-19.

Employee Retention

  • Provides an employee retention tax credit up to $10,000 per employee per quarter kept on an employer’s payroll through the end of 2020.
    • Companies eligible for the tax credit must have fully or partially suspended operations due to a government order and suffered a significant decline in revenues.
  • Allows companies to defer the 6.2% Social Security payroll tax on all wages up to $137,700 through 2020.
    • The taxes must be repaid in equal installments in 2021 and 2022.

Emergency Economic Injury Disaster Loan (EIDL) Grants

  • Expedites access to capital for small businesses who have applied for an SBA EIDL.
    • Businesses can request an advance of up to $10,000 on the loan to provide covered leave, maintain payroll, and pay debt obligations.

Entrepreneurial Development Programs

  • Provides grants and funding to offer training, counseling, and assistance to small businesses affected by COVID-19.
    • $240 million in grants to SBA resource partners, including Small Business Development Centers and Women’s Business Centers.
    • $25 million in grants for resource partner associations to provide online information and training.
    • $10 million in funding for the Commerce Department’s Minority Business Development Agency’s Minority Business Centers.
  • Allows for federal grant funds appropriated to the State Trade Expansion Program (STEP) in FY18 and FY19 to remain available for use through FY21.
    • Allows for state STEP participants to be reimbursed for events canceled due to COVID-19, so long as the reimbursement amount does not exceed their federal grant amount.

Ensuring Banks and Credit Unions Can Continue Lending

  • Provides temporary relief to allow financial institutions of all sizes to prioritize extending more loans to more American consumers and small businesses during this outbreak.
  • Allows community banks to deploy additional, needed capital to consumers and businesses through the end of this public health emergency or December 31, 2020, whichever comes first.

Health Care Supplies, Services, and Workers

  • $200 billion for frontline health care services, supplies, and workers addressing the virus, including:
    • $19.6 billion to help veterans through in-patient care, tele-health, and to expand bed space in VA facilities.
    • $11 billion for research and production of better diagnostic tests and medicine and support for future vaccine manufacturing.
    • $16 billion for medical supplies (respirators and ventilators) and personal protective equipment (gloves, masks, gowns).
    • $100 billion to reimburse hospitals and other health care providers for related expenses or lost revenues attributable to the outbreak.
    • $45 billion for the Disaster Relief Fund to ensure funds are available to states and localities to operate emergency response activities.
    • $4.3 billion for direct response by the CDC.
    • $1 billion for research into an effective vaccine.
    • $16 million for research, including to promote domestic manufacturing of biopharmaceuticals and to address readiness and domestic manufacturing capability.
    • $1 billion for health care, disinfection, and quarantine services in Indian Country.
    • $100 million for expanded use of Department of Energy user facilities and supercomputers to support research into the coronavirus and potential treatments and vaccines.
    • $76 million for the National Science Foundation for near real-time research of the virus, including transmission, virulence, and population dynamics.
    • $340 million for rural broadband and tele-health infrastructure and telemedicine initiatives.
    • $100 million for Emergency Management Performance Grants to state and local emergency management agencies.
    • $100 million for Assistance to Firefighter grants.
    • $80 million for the FDA to approve medical therapies and help address medical supply shortages.

Ensuring Access to Quality and Affordable Care

  • Expands temporary tele-health services during the public health emergency by eliminating the need for a pre-existing provider relationship.
  • Expands coverage of COVID-19 diagnostics to includes tests approved by state labs and developed by CLIA labs before they receive an Emergency Use Authorization from the FDA.
  • Mandates timely commercial coverage of COVID-19 vaccines or preventive treatments in commercial plans.
  • Coverage is provided for any future vaccine under Medicare Part B exempt from the deductible and at no cost in the Medicaid program.
  • Prevents price gouging by out-of-network providers to ensure affordable access to diagnostic tests for all Americans.

Relief for Health Care Providers

  • Temporarily lifts the Medicare sequester, which reduces payments to providers by 2%, from May 1 through December 31, 2020, boosting payments for hospital, physician, nursing home, home health, and other care.
    • The Medicare sequester would be extended by one year beyond current law to provide immediate relief without worsening Medicare’s long-term financial outlook.
  • Inpatient Medicare payments would be increased by 20% to a hospital for treating a patient admitted with COVID-19, with the add-on payment available through the duration of the COVID-19 emergency period.
  • Labs are provided additional time in their mandated reporting period to allow for more time to collect data from a larger selection of applicable labs and be protected from any payment reductions for 2021.
  • $1.32 billion in supplemental funding for the community health centers that are on the front lines of testing and treating patients with COVID-19.

Older Americans

  • Provides additional flexibility for the Secretary of Health and Human Services to ensure vital services are provided to our nation’s seniors, including:
    • Allows full transfer between congregate and home-delivered meal funding and provides additional flexibility in the type of food that can be served.
    • Permits state agencies to determine that homebound individuals include those who are self-quarantining due to the emergency so that those individuals are prioritized for purposes of home-delivered meals.
    • Provides additional flexibilities in the Senior Community Service Employment Program designed to ensure participants are not harmed because their program was closed as the result of the qualifying emergency.
  • Waives mandatory minimum retirement plan distributions for a year.
    • Required distributions are based on the plan’s balance as of December 31, 2019, but that balance may have declined significantly since then.
      • As an example, a retiree is required to withdraw 5% of his plan’s balance each year.
        • His plan balance was $100,000 on December 31 but has since shrunk to $80,000.
        • The 5% withdrawal requirement means he must take $5,000 out of his plan, possibly endangering the long-term ability of that pension to meet his retirement needs.

College and K-12 Students

  • Provides needed relief to college students to ensure they are not harmed by the colleges’ decisions to switch to online delivery models or close outright in the middle of the semester:
    • Provides direct financial relief to many student loan borrowers by pausing their monthly repayment requirements for six months with no penalty.
    • Codifies the Department of Education’s decision to pause collections on defaulted student loans through September 20, 2020.
    • Gives colleges and universities the flexibility needed to direct federal resources through the Supplemental Educational Opportunity Grant program to students struggling the most in this environment.
    • Provides schools the flexibility to ensure this interrupted or unfinished semester does not stop their students’ ability to continue class in the future.
      • Students will not be on the hook for financial aid distributed to them when the pandemic forced them to drop out mid-term.
  • Frees institutional grants from restrictions that prevent minority serving institutions from better serving students in need.
  • Provides the Secretary of Education additional waiver authority to ensure school districts can focus on addressing students’ needs during this pandemic:
    • Codifies the Department of Education’s offer to waive the requirement that states test their students in reading, math, and science, and identify low-performing schools, as well as reporting requirements that rely on that data.
    • Allows schools to use any remaining funds from Title I for next year.
      • Title I is the largest program in the Every Student Succeeds Act (ESEA) that aims to provide all children with the opportunity to receive a high-quality education.
    • Gives school districts increased flexibility in how they use block grant funds, allowing more funds to be used for technology and other activities related to coronavirus recovery.
    • Clarifies that waivers issued under ESEA are also applied to charter schools ensuring that the lack of performance data resulting from a waiver is not an excuse to close a charter school.

Exchange Stabilization Fund

  • Allocates $500 billion to an Exchange Stabilization Fund (ESF), an emergency reserve fund that provides the Treasury Secretary the authority to distribute emergency funding:
    • Up to $46 billion can be used to assist air carriers and businesses critical to our national defense.
    • Up to $454 billion can fund a Federal Reserve facility for distressed businesses.
  • How the $454 billion fund works:
    • Allows the Treasury Secretary to provide loans and loan guarantees to businesses of all sizes.
    • These funds allow the Treasury to finance Fed facilities that will be used to provide liquidity to shore up business lending and our financial markets, including through a special bank-based program for companies that employ 500-10,000 employees.
    • Has the potential to unleash more than $4 trillion in lending to businesses of all sizes, consumers, local governments, and money market funds.
    • This is not a bailout!
      • The fund provides loans that must be paid back, and the loans are for Americans who, through no fault of their own, are in economic jeopardy.
  • Why the ESF is needed:
    • Financial markets are under tremendous pressure for more liquidity and credit.
    • Without liquidity and credit, banks will be unable to provide much-needed financing for businesses to help with their day-to-day expenses like meeting payroll and paying rent.
    • The CARES Act allows the Treasury and the Fed to fix the current liquidity and credit problems in the financial markets by providing direct financing to eligible businesses.
    • The ESF will support businesses of all size and the new Fed facility (500-10,000 employees) seeks to address the gap between the relief provided to small businesses of fewer than 500 employees, and some of the largest companies that have access to other relief.
    • 68 million Americans are employed by businesses with more than 500 employees.
    • This program is addition to the $367 billion in assistance to America’s small businesses.
  • Oversight:
    • Creates a new Special Inspector General for Pandemic Recovery with subpoena power to investigate the sale of loans, loan guarantees, and any other investments made by the Treasury.
    • Creates a five-member Congressional Oversight Commission to conduct oversight of the Treasury and Fed in implementing the fund.
    • Firms controlled by the President, Vice President, most senior-level cabinet officials, Members of Congress, as well as their immediate family members, are prohibited from receiving financing from the fund.