CARES Act Analysis: US Senate Passes Coronavirus Aid, Relief, and Economic Security Act

March 26, 2020

Widely expected to pass both houses of the US Congress by March 27, and to be signed into law by the president, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) lays out a $2 trillion economic stimulus, including over $300 million in emergency supplemental appropriations. This is a high-level summary of key portions of the bill.

The CARES Act provides for direct loans and grants for small and medium-sized businesses, as well as for industries that have experienced significant financial losses due to the unprecedented public health crisis. The act also provides direct cash payments for many Americans, significantly expands unemployment insurance, surges $100 billion to hospitals, and provides funds to acquire more personal protective equipment for healthcare professionals and first responders. Additionally, the CARES Act makes many changes to labor, employee benefits, and tax policy.

Morgan Lewis has assembled a cross-disciplinary team of over 250 lawyers who will be releasing more detailed information over the coming hours and days to break down how the act will affect specific industries. In the meantime, following is a summary of key provisions.

Business Loan Programs and Lending Facilities

  • Provides $500 billion for loans and loan subsidies and support for Federal Reserve Board credit facilities
  • Businesses that are otherwise not receiving adequate relief under other provisions of the act are eligible with specific set-asides for passenger air carriers ($25 billion); cargo air carriers ($4 billion); and businesses critical to maintaining national security ($17 billion). The remaining funds ($454 billion) are for loans, loan guarantees, and investments in support of facilities established by the Federal Reserve to support lending to eligible businesses. For air passenger, cargo, and contractors, an additional $32 billion is available for grants to support employee wages and benefits.
  • Defines “United States businesses” as businesses “that are created or organized in the United States or under the laws of the United States and that have significant operations in and a majority of its employees based in the United States.
  • Imposes certain restrictions on businesses securing loans, including limits on executive compensation, preventing stock repurchases, maintaining existing employment levels as of March 2, 2020, and other labor/employment requirements.
  • Encourages the US Treasury Secretary to “seek the implementation of a Middle Market loan facility for banks to provide loans to businesses and eligible nonprofits with 500-10,000 employees.”
  • Authorizes the Federal Reserve to create a Main Street Lending Facility for small and mid-size businesses.
  • Requires the Treasury Secretary to publicly report detailed information on each authorized transaction within 72 hours.

Business Tax Provisions

  • Delays payment of employer payroll taxes (50% to December 31, 2021, and remainder due on December 31, 2020).
  • Provides 50% tax credit for employee retention applicable to the employer’s share of payroll taxes on wages up to $10,000.
  • Modifies net operating losses in 2018, 2019, and 2020.
  • Accelerates ability of companies to recover AMT credits.
  • Modifies limitation on business interest.

Retirement and Employee Benefits

  • Delays any required minimum pension contributions due in 2020 until January 1, 2021.
  • Allows the US Labor Department to delay employee benefit related deadlines.
  • Allows a plan sponsor to use the adjusted funding target attainment percentage for the last plan year ending before January 1, 2020, for plan years including calendar year 2020.

Temporary Authority Of Director Of The USPTO

  • Authorizes the Director of the USPTO, during a temporary emergency period, to toll, waive, adjust or modify, any timing deadline established by Title 35 of the United States Code (Patents), the Trademark Act, Section 18 of the America Invents Act (Post-Grant Review), or regulations promulgated thereunder in effect during such period.
  • The Director must make certain findings in order to exercise the temporary authority.

Banking Relief

  • Delivers regulatory relief from accounting standards for loan modifications related to COVID-19.
  • Provides temporary relief from CECL standards.
  • Makes available “forbearance” on the mortgage loan for federally backed mortgages.

Small Business Relief

  • Establishes a new $349 billion lending program, modeled on existing Small Business Administration (SBA) 7(a) program, with 100% government guarantee.
  • Defines small businesses as having less than 500 employees or otherwise satisfying existing SBA size standards (varies significantly by industry, reference 13 CFR 121.201 for the applicable revenue or employee threshold).
  • Makes eligible businesses under North American Industry Classification System (NAICS) Code 72 (Accommodation and Food Services) with up to 500 employees at each physical location.
  • Makes eligible sole proprietors, the self-employed, and independent contractors.


  • Provides direct payments to taxpayers equal to $1,200 per individual ($2,400 joint return) plus $500 per child; phased out for incomes above $75,000 ($150,000 joint return).
  • Makes available penalty-free distributions up to $100,000 from tax-favored retirement plans related to COVID-19.
  • Waives required minimum distributions from retirement plans and IRAs for 2020.

Unemployment Programs

  • Extends unemployment insurance (UI) by 13 weeks and includes a four-month enhancement of benefits.
  • Makes available unemployment compensation for those not eligible for regular UI, including those who may have exhausted benefits.

Paid Leave Changes (Changes to the Phase II bill recently enacted)

  • Caps paid Family and Medical Leave Act (FMLA) leave under the Families First Coronavirus Response Act (FFCRA) at $200 per day and $10,000 in total.
  • Caps paid sick leave under the FFCRA at $511 per day and $5,100 in total. This amount drops to $200 per day and $2,000 in total for sick leave taken to care for a family member or because of a school closure.
  • Makes eligible for paid FMLA leave workers who are laid off after March 1 but then rehired.

Health Care Provisions

  • Provides $100 billion to ensure healthcare providers for COVID-19 related expenses and lost revenue.
  • Requires the coverage under Medicare Part B of COVID-19 vaccine and its administration without any cost-sharing.
  • Delays disproportionate share hospital (DSH) reductions through November 30, 2020.
  • Extends the date on which a series of funding provisions are set to expire from May 22, 2020, until November 30, 2020.
  • Creates a Medicare add-on payment of 20% for both rural and urban inpatient hospital COVID-19 patients.
  • Expands the existing option for hospitals to receive “accelerated” Medicare payments including by ensuring critical access hospitals can access this option.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.


If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers.

Sage Fattahian 

Joanna Christofarou

Andrew T. Budreika
Timothy W. Levin

Washington, DC
Jennifer Breen
Sharon Perley Masling
Kathleen M. Sanzo