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March 30, 2020

Coronavirus Aid, Relief and Economic Security Act (CARES Act)

The U.S. Congress passed and the President signed an unprecedented stimulus bill with a $2 trillion price tag to lessen the economic impact of the novel coronavirus, COVID-19. This bill, which represents the largest emergency aid package in U.S. history, is designed to help individuals, businesses, states and local governments. Here are the key provisions of the relief package:


• Give one-time direct payments of up to $1,200 for individuals and $2,400 for couples, with $500 added for every child. The benefit would start to phase out for individuals making $75,000, and families making $150,000, going away completely at the $99,000 and $198,000 thresholds, respectively.

• Boost unemployment insurance, adding $600 per week for up to four months on top of what beneficiaries normally receive from state unemployment benefits. Self-employed people and independent contractors, who are normally not eligible for state unemployment benefits, would be eligible for federal benefits.

• Waive financial penalties for virus-related early withdrawals and ease required minimum distributions from retirement accounts for 2020.

• Give a forbearance to anyone facing a hardship from COVID-19 on a federally backed mortgage loan of up to 60 days, which can be extended for up to 4 months. Ban servicers of federally backed mortgage loans from beginning the foreclosure process for 60 days from March 18.

• Increase deductions for charitable contributions to allow for above-the-line-deductions of up to $300.

• Suspend federal student loan payments through Sept. 30 with no accrual of interest on those loans.

• Require group health plans and insurance providers to cover preventive services related to coronavirus without cost sharing.


• Create a $500 billion pool of taxpayer money to make loans to or investments in businesses, states and municipalities damaged by the crisis. That specifically includes $25 billion for passenger air carriers, $4 billion for cargo air carriers and $17 billion for businesses that work in national security. The rest of the funds, $454 billion, are given wide latitude to provide loans to businesses, states and local governments.

• Give $350 billion in loans for small businesses to cover salary, wages and benefits, worth 250% of an employer’s monthly payroll, with a maximum loan of $10 million.

• Include a tax credit for retaining employees, worth up to 50% of wages paid during the crisis, for businesses forced to suspend operations or that have seen gross receipts fall by 50% from the previous year.

• Delay payroll tax for employers, requiring half of the deferred tax to be paid by the end of 2021 and the other half by the end of 2022.

• Provide $150 billion of assistance to state and local governments for medical response, community services and other measures.

• Put $117 billion into hospitals and veterans’ health care. About $65 billion will go to hospitals, with the rest funneled to doctors, nurses, suppliers and others.

• Ban companies that take government loans from buying back stock until a year after the loan is paid back.

• Bar employees or executives who made at least $425,000 last year from getting a raise.

• Prevent the President, Vice President, heads of executive departments, members of Congress and their families from receiving emergency taxpayer relief.

While this relief package may not be enough to completely overcome the economic challenges in coming months, financial markets have responded favorably to the fiscal stimulus, leading to a sharp reversal of the steep selloff we have seen over the past month. Combined with the Federal Reserve’s aggressive actions to lower interest rates and inject substantial liquidity into the financial system, we believe these steps will help stabilize the market and temper some of the extraordinary volatility. We will continue to provide investment updates and guidance during this public health crisis.

Beacon Trust Investment Team

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