A CARES Act Primer for Agents and Advisors

The coronavirus pandemic has created uncertainty and stress for many agents and advisors.

The state of Pennsylvania has just banned in-person sales of insurance products during that state’s stay-at-home period, which will surely have an impact on commissions and business practices.

Other state departments of insurance will most likely follow this course.

Everyone is looking for ways to be of service to their clients and help people protect their family while also adapting for ways to preserve their business.

The Coronavirus Aid, Relief, and Economics Security Act, (CARES) that was just passed and signed by the president offers some relief.

Here are some of the provisions of the CARES Act.

Sick Leave Requirements

This provision provides 80 hours (two weeks) of sick leave for full-time employees. It’s available for immediate use if a full-time employee:

Is sick or quarantined (paid at 100% of employer rate, and capped at $511 per day, and $5,110 total); or
Is caring for someone who is sick and quarantined, or is caring for a child and has lost child care due to the public health emergency (paid at 66.7% of the employee rate and capped at $200 per day, and $2,000 total)

A related Family and Medical Leave Act (FMLA) expansion provision provides up to 12 weeks of FMLA leave, unpaid during the first 10 days, and then paid at 66.7% of the employee rate (capped at $200 per day, and $10,000/total). The extra FMLA leave is available after 30 days of employment.

Sick Leave Requirement Resources

The CARES Act provides employer tax credits to help cover the cost of the employee leave benefits, computed quarterly.

There are three relevant periods to compute the amount of the credit:

First Two Weeks: This credit relates to qualified sick leave wages paid. The credit amount depends on whether the employee is sick, caring for a sick family member, or providing childcare to the employee’s child.
Employee Sick: The credit is the lesser of the daily wage or $511 per employee, per day, for 10 days.
Providing Care for Family Member, or Child Care for a Child: The credit is the lesser of the daily wage or $200 per employee, per day, with the credit capped at $10,000 per employee for a given calendar quarter.

Loans

Through one loan program, the Small Business Loan Relief program, the Small Business Administration (SBA) will pay all principal, interest, and fees on all preexisting SBA 7(a) loan products for six months, to provide economic relief.

The CARES Act also provides a Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL)

A small business may receive both PPP and EIDL loans; however, the funds must be used for different purposes.

SBA Paycheck Protection Program

This program is designed for small businesses, to preserve the employees’ salaries.

Small Business Loans: Emergency

These loans are designed to provide economic relief due to and emergency or catastrophe. They can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid due to the epidemic’s economic impact.

This program could help up to 2 million; payable over 30 years, with an interest rate of 3.7% or 2.75%.

The program provides a $10,000 advance. The advance need not be repaid.

The borrowers eligible for these loans are small businesses, as defined by NAICS industry codes, based on revenue or employees, and nonprofits, including Section (c)(6) organizations of any size.

Employee Retention Credit

This CARES Act tax credit program provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis.

The credit is available to employers whose: