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Updated: March 30, 2020

How the CARES Act helps small businesses, their owners, and employees

Published By:

Erin Ellison

Payroll that will never let you down

To help individuals, businesses, and the economy, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. Many details of the Act will be fleshed out by regulatory agencies like the IRS, Department of Labor, and Small Business Administration over the next few weeks, but we now know enough to give you a good idea of how it can help most small businesses.

CARES Act Overview

The $2.2 trillion CARES Act offers wide-reaching regulations, loans, and grants that impact small businesses, their employees, major corporations, and individual taxpayers. In this article, we’ll focus on the parts of the legislation that affect small businesses directly. We’ll also include a quick list of other provisions that are likely to be relevant to business owners and their employees.



There are three parts of the Act that will be particularly relevant to many small businesses:

  1. Payroll tax credits to give business owners an incentive to keep employees on the payroll.
  2. Delayed payment of social security taxes to decrease the short-term cost of paying employees
  3. Paycheck protection loans from the SBA to give small businesses (and select others) easier access to loans to cover their average monthly payroll costs



There are also provisions that benefit self-employed business owners, rebate payments for individuals who earn less than $99,000 annually and help for certain industries. See the full text of the law, or review this broader overview of the CARES Act for more detail. Also, note that Congress also recently passed a series of reforms to expand paid sick and family leave in the Families First Coronavirus Recovery Act.


To address the rise in unemployment claims, the CARES Act provides two types of tax incentives for small businesses to retain workers during the crisis:

Payroll tax credits for businesses in need

Certain employers (including tax-exempt entities) are eligible to have 50% of what they spend on wages refunded in the form of a tax credit — up to $5,000 per worker.


See our article to understand whether you’re eligible and how refunds work.

Delayed social security and self-employment taxes

Instead of paying the 6.2% employers’ portion of social security taxes (or corresponding self-employment taxes) each quarter, employers have the option of making delayed payments:

  • 50 percent on December 31, 2021
  • 50 percent on December 31, 2022


For more detail, see our article.

SBA paycheck protection loans

The CARES Act expands the SBA’s 7(a) loan program to certain businesses that are affected by COVID-19. Eligible businesses may receive larger loans and easier approvals when applying for SBA-backed funds. To understand eligibility and how funds may be used, see our article.



Other CARES Act provisions impacting small businesses

Here are a few more provisions of the CARES act that apply to a narrower group of small businesses.

  • SBA loan forgiveness
  • Exclusion for some employer payments of student loans
  • 5-year net operating loss carrybacks
  • Increased business interest expense deductions
  • Pass through business losses
  • Accelerated Alternative Minimum Tax credits
  • Postponed ERISA Filing Deadlines (to be determined by Department of Labor)
  • Delayed funding dates for single employer pension plans


The CARES Act also includes relief for specific industries. To learn more, here’s a broader overview of other key provisions. Also note that these lists may not be complete, so please consult with your lawyer, accountant, or the relevant government agency for more information.

Additional relief for individuals

Finally, the CARES Act includes three provisions that will be important for many small business owners and their employees:

  • Enhanced unemployment benefits: In addition to state unemployment benefits, unemployed workers can get an extra $600 per week for up to four months.  Learn more.
  • Stimulus checks: Individuals who earn less than $99,000 (and couples filing jointly who earn less than $198,000) will receive stimulus checks from the federal government. Checks can be up to $1200 for individuals, $2400 per couple, and $500 per child, but the amount goes down as income increases. See details and eligibility.
  • Special rules for accessing funds in retirement plans: The CARES act creates new rules for how people can take distributions and borrow money from their retirement plans. This may be interesting to small business owners who need short-term liquidity. See details.


The CARES Act is just one way the federal government is trying to help people through the COVID-19 outbreak. For example, paid sick and family leave were expanded under the Family First Coronavirus Response Act. For more information about how your small business can navigate the COVID-19 outbreak, see our Resource Center.

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Erin Ellison is the former Content Marketing Manager for OnPay. She has more than 15 years of writing experience, is a former small business owner, and has managed payroll, scheduling, and HR for more than 75 employees. She lives and works in Atlanta.