The Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) (H.R. 748) signed by President Trump on 27 March 2020 provides for new tax and non-tax measures for individuals and businesses in response to the economic consequences of the COVID-19 pandemic.
Economic relief measures contained in the CARES Act include the following:
- creation of a Corona Relief Fund to provide financial support to certain states facing revenue declines as a result of the COVID-19 emergency;
- a temporary emergency loan programme providing loans of up to USD 10 million for small businesses, in order to cover costs of payroll, rent and mortgage interest necessitated by the COVID-19 emergency, with provision for loan forgiveness in certain circumstances;
- funding of up to USD 500 billion for the making of loans, loan guarantees and other investments, to support states, municipalities, airlines and other critical industries, as well as businesses for which alternative financing is not reasonably available. Eligible businesses must be US based and other conditions such as maintaining employment levels can apply. Small businesses are expressly eligible for support under the programme;
- lump sum income tax rebate payments to US individual taxpayers earning below specified thresholds, including those who have no income;
- temporarily increased and extended unemployment benefits, including for self-employed and similar persons not traditionally eligible for unemployment benefits;
- support for "short-time compensation" programmes, where employers reduce employee hours instead of laying off workers and the employees with reduced hours receive a pro-rated unemployment benefit;
- financial assistance for food assistance programmes; and
- COVID-19 related hardship relief for borrowers with federally-backed mortgages.
It has been reported that a further legislative package including economic relief measures is being prepared.
The CARES Act is distinct from a legislative proposal made by House of Congress Democrats on 23 March 2020 (the Take Responsibility for Workers and Families Act (H.R. 6379)), which includes a wide range of economic measures to address the COVID-19 emergency, including cash grants to individual taxpayers, enhanced unemployment sick-leave measures, and financial support for small businesses.