Small business owner writing down answer to question

The CARES Act 8 Most Commonly Asked Questions (and Answers)

6 min read • Mar 31, 2020 • Jesse Sumrak
Due to the fast-changing nature of COVID-19 programs and SBA COVID-19 programs, posts may become quickly out of date. Please check our COVID-19 section for the most up-to-date information on rates, terms, and other info for PPP loans/EIDLs. 

Every news outlet has been jam-packed with updates on the recently passed $2 trillion coronavirus stimulus plan (CARES Act). Promises of checks for everyone, extended tax deadlines, tax-free student loans, small business emergency grants, and more proliferate across the internet.

And with those promises come questions, especially for small business owners. We’ve heard questions all week—and have had our fair share, too—and (fortunately) we’ve found answers. Below, we’re uncovering answers to 8 of the most common questions about the CARES Act. 

Most Common Questions About the CARES Act

1. What is the CARES Act?

The CARES Act is a $2+ trillion federal economic stimulus plan intended to boost the US economy by:

  • Confronting the coronavirus (COVID-19) through public health spending
  • Providing cash relief to individuals and families in need
  • Extending financial assistance to small businesses impacted by the coronavirus through loans, debt forgiveness, tax extensions, payroll credits, and more
  • Administering targeted relief to hard-hit industries

In short, it’s monetary assistance for everyone in the country financially impacted by the novel COVID-19 pandemic.

2. What does CARES stand for?

CARES stands for “Coronavirus Aid, Relief, and Economic Security.” It’s a mouthful, and that’s why everyone is just calling it the CARES Act.

You could probably argue it’s the government acknowledging they care, and you wouldn’t be wrong.

3. How does the CARES Act help small businesses?

In short, the CARES Act earmarks more than $367 billion (with a “b”) for small businesses that are fighting to survive amid closures and social-distancing executive orders. Here are all the different ways the CARES Act is supporting small businesses:

  • SBA COVID-19 Small Business Disaster Loan: SBA Economic Injury Disaster Loans (EIDL) for up to $2 million in working capital to help small businesses survive the COVID-19 crisis.
  • Paycheck Protection Program Loans: To help keep workers employed, the SBA’s offering Paycheck Protection Program (PPP) loans up to $10 million. These loans can be used to help businesses finance payroll, rent, and utilities. If businesses maintain their payroll for 8 weeks, the portions of the loan they spend on payroll-related expenses can be forgiven.
  • Emergency grants: Grants of up to $10,000 to provide emergency relief for small businesses with urgent needs.
  • Forgivable loans: Any portion of government loans used to maintain payroll, cover rent or mortgage, or to pay existing debts could be forgiven.
  • Existing loan relief: Funds to help the SBA cover up to 6 months of payments for small businesses that already have SBA loans.
  • Tax extensions: The IRS, and many state governments, have extended tax filing deadlines until July 15, 2020.

4. What businesses are eligible to benefit from the CARES Act?

For small business benefits, the eligibility requirements are simple. You’ll need:

  1. To be a US business in any state or territory
  2. To have fewer than 500 employees
  3. To prove COVID-19 has financially damaged your business

5. When should your small business expect to receive funding?

The SBA plans to review and approve all applications 2–3 weeks after submission. If approved, you should receive an initial $25,000 disbursement within 5 days. Then, you’ll receive the rest of the loan incrementally over a determined schedule. So plan on close to 30 days from application to funding.

6. What if my business doesn’t need financial assistance?

You should go ahead and apply anyway. There’s no fee for applying, and you won’t be penalized if you’re approved and reject the loan. The economy is rapidly changing, and it’s hard to know what’s around the corner. It’s not a bad idea to go ahead and create a robust backup plan—just in case.

7. Can the CARES Act actually work?

Nobody thinks the CARES Act is going to magically fix everything, but supporters of the bill are hopeful it will at least help.

Doubters argue that it’s not enough for industries hit hardest by mandatory shutdowns and extreme social distancing laws. Also, unlike your typical SBA loan (which is funded from bank loans), capital from federal COVID-19 small business loans is coming straight from the US treasury. With $350+ billion to allocate, people question the SBA’s ability to review and process loans in an efficient manner.

Time is money (and survival) for small businesses. And the SBA website’s frequent crashes suggest the administration might not be ready to deal with the expected applicant volume. Yet the SBA seems determined to provide quick turnaround times and grants up to $10,000 within 3 days.

It’s a lofty goal, and only time will tell how it will all play out.

8. Where is all this cash coming from?

Money for you, money for me, money for everyone—but where is it all coming from? Good question.

Usually, when the government wants to pay for a bill, it adds dollars to bank accounts while offsetting the spending with taxes. But since the whole point of providing cash relief to Americans is to, well, provide relief, the government isn’t going to increase taxes to pay for it.

Instead, Congress is essentially just creating cash. But what about inflation, you ask? Well, that’s another good question that this article does a good job of answering.

Have Other Questions?

Have a question we didn’t cover? Need help applying for a COVID-19 small business loan? Our team’s got you covered. Give us a call at (855) 853-6346, and we’ll do everything we can to answer your questions and set your business up for success.

We’re all in this together. Keep calm and small business on.

While every effort is made to ensure the accuracy of information when a story is published, the coronavirus pandemic and Paycheck Protection Program (PPP) have caused details to change at a rapid pace. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the information contained in these pages. For the most up-to-date information, please visit the COVID-19 section of our website. For more information, you can call us at (855) 853-6346. Lendio is not responsible for and provides no warranty as to the accuracy of this content. Lendio does not provide legal, accounting or tax advice. The information and services Lendio provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.


Jesse Sumrak

Jesse Sumrak is a Social Media Manager for SendGrid, a leading digital communication platform. He's created and managed content for startups, growth-stage companies, and publicly-traded businesses. Jesse has spent almost a decade writing about small business and entrepreneurship topics, having built and sold his own post-apocalyptic fitness bootstrapped startup. When he's not dabbling in digital marketing, you'll find him ultrarunning in the Rocky Mountains of Colorado. Jesse studied Public Relations at Brigham Young University.