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CARES Act Payroll/Loan Program Preview

This summary discusses some key provisions of the Senate Bill version of the “CARES Act,” S.B. 3548, as applicable to employers and small businesses. In many ways this legislative package, if passed, will supersede or provide assistance to employers well […]


This summary discusses some key provisions of the Senate Bill version of the “CARES Act,” S.B. 3548, as applicable to employers and small businesses. In many ways this legislative package, if passed, will supersede or provide assistance to employers well exceeding prior state and federal enactments.

This blog is intended to provide generalized information for planning purposes rather than details of the implementation of the legislatively-created benefits, many of which must necessarily remain to be developed at the state and federal levels.

$350 Billion Loan Program

The core of the CARES legislative program, if passed more or less in its current state, is a $350 billion loan program intended to encourage small businesses not to lay off their employees, to preserve consumer demand and allow those businesses better to “snap back” following the current crisis. This aspect of the package falls under the CARES Act Payroll Protection Title of the omnibus package.

Loaned funds used for payroll, rent, mortgage interest, and utility payments would be forgiven if certain conditions are met. Importantly, the principal amount of loaned funds used for approved purposes is to be forgiven if the borrower maintains its pre-crisis full-time workforce  as of the date of the loan; interest, capped at 4%, will remain payable.

The program will be administered by the Small Business Administration and will adopt existing SBA loan program policies. Loan eligibility standards and application requirements will be significantly loosened.

CARES would allow a 50% refundable payroll tax credit on worker wages paid during the crisis. Additional tax law adjustments will liberalize net operating loss-reduction rules, allowing greater offset of business income.

Sole proprietors and other self-employed workers could be eligible for the expanded unemployment-insurance benefits the bill provides. At the present, “gig economy” workers appear not to be eligible for these expanded benefits. The loans will be available to companies with 500 or fewer employees.

Businesses can receive loans up to $10 million, based on how much the company paid its employees between Jan. 1 and Feb. 29. The loans will carry an interest rate up to 4%.


Fraser Trebilcock Shareholder Dave Houston has over 40 years of experience representing employers in planning, counseling, and litigating virtually all employment claims and disputes including labor relations (NLRB and MERC), wage and overtime, and employment discrimination, and negotiation of union contracts. He has authored numerous publications regarding employment issues. You can reach him at 517.377.0855 or dhouston@fraserlawfirm.com.