By Patrick O'Brien, JD, legal coordinator, American Med Spa Association

A new aid package designed to provide relief for the disruptions cause by the ongoing coronavirus pandemic has been introduced in the U.S. Senate. Senate Bill 3548 (S 3548) is known as the "Coronavirus Aid, Relief and Economic Security Act," or the "CARES Act." It provides relief for small businesses, individuals and families, and seeks to address supply and shortages in medical products, devices and testing. It is broad in scope, so this post will only look at a few of the provisions as they pertain to small businesses. These bills have been moving quickly through the legislative process, often with substantial changes.

Small Business Interruption Loans

S 3548 would increase eligibility and relax some requirements for applying for business interruption loans. Businesses with fewer than 500 employees are eligible to apply for this special U.S. Small Business Administration (SBA) loan program during 2020. The maximum loan size is based on four times the average annual payroll, mortgage, rent and debt payments, up to $10 million. Loan funds can be used to meet operating, payroll and business expenses. Eligibility for such loans is based only on being in operation as of March 1, 2020, with employees for whom payroll taxes were paid. The SBA is directed to waive or reduce fees for these loans as much as possible, and will guarantee the lenders at 100% of the loan value. Additionally, payments for loans under this program would be deferred until at least January 2021 and up to a year.

Please note: Companies that have received SBA disaster loans under section 7(b) would be disqualified from participating in the loan program described by this bill.

Loan Forgiveness for Payroll

For loans issued under the above program, there will be a forgiveness period for maintaining payroll from March 1 to June 30, 2020. This includes paying for sick leave, family leave wages under the Families First Coronavirus Response Act and compensation up to $33,333 per employee. The forgiveness amounts are subject to some limits and reduction based on the average number of workers and total compensation.

Entrepreneurial Development

Grant money will be made available to resource partners to provide education, training and advising services to businesses that have been "substantially" affected by COVID-19.

Changes to the Emergency Family and Medical Leave Expansion Act

S 3548 adds some fixes and modifications to the emergency family leave provided by the Families First Coronavirus Response Act that was passed earlier this week. It would limit the amount of sick leave the employer would be required to pay to 10 at $511 per day (for a total of $5,110) if the employee is subject to a quarantine order, or $200 per day (for a total of $2,000) for employees who are caring for someone under quarantine or a son or daughter displaced from school.

Relief for Corporations

Under S 3548, a number of deadlines related to taxes for corporations are relaxed or postponed. Estimate tax payments that are normally due would now not be due before Oct 15, 2020; additional payments for payroll taxes will be deemed on time if made by October 15. There are a number of other modifications that apply in specific tax circumstances. You should consult your tax advisor for guidance, provided the bill becomes law.