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The CARES Act: A User's Guide for Broadcasters

This site has been updated to reflect the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act (Economic Aid Act), enacted on December 27, 2020.

  • Small Business Administration (SBA) Loan Program
    • The Coronavirus Aid, Relief and Economic Security (CARES) Act, enacted on March 27, 2020, established a forgivable loan program for small businesses, known as the Paycheck Protection Program (PPP). The Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act (Economic Aid Act), enacted on December 27, 2020, extends PPP until March 31, 2021. The program will reopen the week of January 11, with first draw loans available for application beginning that date and second draw loans on January 13.
    • For those who used or will use (prior to disbursement of the second loan) a loan in the first round of PPP, the Economic Aid Act may provide for a second PPP forgivable loan. Businesses and nonprofits with 300 or fewer employees that can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019 are eligible for this second round. Implementing rules also allow these calculations to be made on an annual basis between 2019 and 2020, with supporting annual tax forms. These loans are capped at $2 million each. Generally speaking, publicly traded companies are ineligible for a second draw PPP loan, though the individual physical locations of news organizations are eligible despite relation to a publicly traded parent company.
    • Many broadcasters were ineligible for the first round of PPP because their ownership group employed more than 500 employees in total across the company. The Economic Aid Act fixes this problem, allowing broadcasters and newspapers to instead tally employees by individual location to meet the law’s definition of a small business. These companies will be eligible for a first-round loan of up to $10 million each, if they have fewer than 500 employees at each qualifying station’s individual physical location and certify that they will use these funds to support expenses for the production or distribution of locally focused or emergency information. There is no revenue loss threshold for these first-round loans, and stations may qualify regardless of whether their ownership groups are publicly traded entities. These broadcasters may also be eligible for a second draw PPP loan, under the terms outlined above.
    • The maximum loan amount is 250% of average monthly payroll expenses for salaries up to $100,000 annually per employee and insurance benefits, as compared to either 2019 or 2020 (borrower’s choice). The amount eligible for forgiveness is the sum of those expenses as well as covered mortgage, rent and utility payments, operations expenditures, property damage costs, supplier costs and covered worker protection expenditures incurred during the covered period. Forgivable payroll costs must constitute at least 60% of the loan. Borrowers may use the PPP for other business-related expenses like inventory, but that portion of the loan will not be forgiven.
    • Eligible entities must have been in operation on February 15, 2020 and have not permanently closed as of the loan application date. Certain other eligible expenses (e.g., mortgage, rent, utility service) must have also been committed to by this date.
    • Borrowers may choose to cover any eight-week period ending up to 24 weeks after loan disbursement.
    • The purpose of the PPP is to help employers retain employees at their current base pay. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. If borrowers keep all employees, the entirety of the loan, including interest, should be forgiven. Forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease. If they lay off employees, the forgiveness will be reduced by the percentage decrease in the number of employees. If total payroll expenses on workers making less than $100,000 annually decreases by more than 25%, loan forgiveness will be reduced by the same amount. If employers laid off employees between February 15 and April 26, 2020, they can still be forgiven for the full amount of payroll costs if they rehire employees by December 31, 2020. If they are unable to rehire those employees or reopen to business in a way that complies with safety standards, more leeway will be provided for loan forgiveness.
    • Interested parties can apply for the PPP at any lending institution that is approved to participate in the program through the existing Small Business Administration (SBA) 7(a) lending program. Additional lenders will also be approved by the Department of Treasury. This could be the bank parties already use or a nearby bank. SBA-approved lenders can be found here. Local Small Business Development Centers or Women’s Business Centers will provide free assistance and guide those interested to lenders.
    • To calculate payroll costs, see the methodology beginning on page 31 of the interim final rule or beginning on page 28 here for second draw loans.
    • The borrower application for first draw loans can be found here and the application for second draw loans here.
    • Borrowers may seek loan forgiveness at the end of the period for which they use the loan. Borrowers can work with lenders to verify covered expenses and the proper amount of forgiveness. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
    • The Economic Aid Act simplifies the forgiveness process for loans of $150,000 or less, including those borrowed before passage of that law. Such loans will be forgiven if the borrower submits to the lender a certification that includes the number of employees retained thanks to the loan, the total estimated amount of the loan spent on payroll and the total amount of the loan. Borrowers must retain relevant employment records for four years and other records for three years for potential fraud auditing purposes. Borrowers of loans above $150,000 must complete and submit the Loan Forgiveness Application to their lenders within 10 months after the end of the period covered by the loan.
    • If a borrower uses the loan for reasons not covered under the forgiveness provisions, the loan carries an interest rate of one percent. Loan payments may be deferred until after the SBA notifies the lender of loan forgiveness status, during which period interest will accrue, starting at the origination of the loan. If the borrower fails to apply for forgiveness within 10 months of the end of the forgiveness period, then the start date for payments will commence on that date. The loan will be due in two years but can be paid off earlier with no prepayment penalties or fees. Loans taken out after June 5 have an extended maturity period of five years.
    • Borrowers can take out a state bridge loan and still be eligible for the PPP loan.
    • Borrowers may not take out a PPP loan and also receive a grant for shuttered venue operators.
    • For borrowers who took out an Economic Injury Disaster Loan (EIDL) related to COVID-19 before the PPP became available (between January 31, 2020 and the date at which the PPP became available), the EIDL may be refinanced into the PPP for loan forgiveness purposes. However, borrowers may not take out an EIDL and a PPP for the same purposes. Remaining portions of the EIDL, for purposes other than those laid out in loan forgiveness terms for a PPP loan, would remain a loan. Previously, if a party took advantage of an emergency EIDL grant award of up to $10,000, that amount would be subtracted from the amount forgiven under PPP, but the Economic Aid Act repeals this requirement, so potential borrowers can still apply for the full PPP loans even if they received EIDL payments.
    • The Economic Aid Act overrides IRS guidance, specifying that forgiven PPP loans will not be included in taxable income. It also clarifies that deductions are allowed for expenses paid with proceeds of a forgiven PPP loan, effective as of the date of enactment of the CARES Act and applicable to subsequent PPP loans. This same tax treatment also applies to EIDL grants and certain loans and loan repayment assistance. Additionally, PPP loan forgiveness is excluded from a borrower’s gross receipts when calculating revenue loss for second draw loans.
    • Additionally, the Economic Aid Act allows small businesses and nonprofits in low-income communities to receive $10,000 EIDL Advance grants. Any small businesses and nonprofits in low-income communities that received an EIDL Advance previously are also eligible to receive the full $10,000 if their award was less in the first round of grants.
  • Advertising
    • Broadcasters have suffered major losses in advertising revenue in 2020. The new law provides for a five-year, $75 million vaccine public awareness campaign managed by the Secretary of Health and Human Services (HHS), that lists television and radio first amongst eligible mediums.
    • These new dollars build on the existing funds and programming at HHS as well as language attached to Appropriations Committee bills, encouraging major federal agencies to prioritize local media in spending on public awareness advertising campaigns.
  • Corporate Tax Changes

    Modifications of Payroll Taxes

    • Employers or self-employed individuals may defer payment of the employer’s share of the Social Security tax they are otherwise responsible for paying to the federal government with respect to their employees. Half of the taxes incurred through the end of 2020 must be repaid by December 31, 2021 and the other half by December 31, 2022.
    • On August 8, 2020, the president issued a memorandum to allow employers to defer withholding employees’ share of payroll taxes from September 1 through December 31, 2020, and required employers to increase withholding and pay the deferred amounts from wages and compensation paid between January 1, 2021 and April 31, 2021. The Economic Aid Act extends the repayment period through December 31, 2021. Penalties and interest on deferred unpaid tax liability will not begin to accrue until January 1, 2022.
    • The Economic Aid Act extends the refundable payroll tax credits for paid sick and family leave that were established in the Families First Coronavirus Response Act, through March 31, 2021. The bill also allows self-employed individuals to use their average daily self-employment income from 2019, rather than 2020, for purposes of computing these credits.

    Modifications for Net Operating Losses

    • For those with net operating losses (NOL), this provision relaxes the policy that previously did not allow that NOL to be carried back to reduce income in a prior tax year. Taxpayers may now carry back five years an NOL arising in a tax year beginning in 2018, 2019 or 2020.
    • Taxpayers may now also use an NOL to fully offset income in 2020, as the law temporarily removes the taxable income limitation.

    Modification of Limitation on Business Interest

    • Taxpayers may now temporarily increase the amount of interest deductibility in 2019 and 2020 from the prior 30% limitation to 50% of adjusted taxable income.
    • This provision intends to increase liquidity with a reduced cost of capital, enabling businesses to continue operations and keep employees on payroll.
  • Treasury Loans
    • While prior relief packages established Treasury Department lending programs, the Economic Aid Act concluded these at the end of 2020.
  • Grants for Shuttered Venue Operators
    • The bill provides for SBA grants up to $10 million, as well as a supplemental grant that is equal to 50% of the initial grant, to live venues, independent movie theaters and cultural institutions who demonstrate a 25% reduction in revenues due to the pandemic.
    • Grants can be used to cover expenses such as payroll costs, rent, utilities and personal protective equipment.
    • Two priority periods are established to ensure the hardest-hit entities have dedicated access to assistance. In the initial 14-day period of implementation, grants shall only be awarded to eligible entities that have faced 90% or greater revenue loss. In the 14-day period following the initial 14-day period, grants shall only be awarded to eligible entities that have faced 70% or greater revenue loss. After these two periods, grants shall be awarded to all other eligible entities.
    • Entities that receive a grant under this program are ineligible for a PPP loan.
  • Unemployment Insurance/Compensation
    • The Pandemic Unemployment Assistance program, extended by the Economic Aid Act until March 14, 2021, allows unemployment benefits for workers who have a job but are unable to work or telework due to COVID-19-related reasons and are not receiving paid leave through their employer. This is in addition to traditional unemployment insurance.
    • Those who can certify that they are ordinarily able and willing to work but can’t because of the COVID-19 emergency – whether they have tested positive, are caring for a family member who has or are unable to reach the office due to quarantine – should be eligible for assistance.
    • Eligible recipients include furloughed workers, the self-employed and contractors. This is true even for those who were scheduled to start a job but lost it or are unable to work as the result of COVID-19. Those able to work from home do not qualify. In some states, part-time workers can receive partial benefits.
    • Under this temporary program, the federal government will waive the normal one-week waiting period but individual states must choose to accept that help.
    • Recipients do not need to demonstrate that they have been looking for work, allowing furloughed employees to stay connected to their employers once this time passes.
    • Employers can reduce employee hours instead of laying off workers and the employees would receive a pro-rated unemployment benefit for their reduced hours. This is known as a Shared Work program or "short-time compensation."
    • Although it varies by state, most states provide access to unemployment benefits for a maximum of 26 weeks. The Economic Aid Act provides for 24 additional weeks (or 50 for those in non-traditional employment roles) of unemployment, through March 14, 2021, for those who need it.
    • Unemployment benefits across the country averaged $385 per week in February 2020 but vary significantly by state. Generally, a person’s benefits replace about one-third to half of their wages. The CARES Act provides an additional $600 per week on top of whatever a person would normally receive in their state. The Economic Aid Act continues this supplement but at a rate of $300 additional.
    • The Economic Aid Act requires states to have methods in place to address situations when claimants of unemployment compensation refuse to return to work or refuse to accept an offer of suitable work without good cause.
    • Unemployment benefits are taxable income and they generally count as income when determining eligibility for public assistance programs.
    • To find out how to apply for unemployment in individual states, visit this site.
  • Employee Retention Credit
    • Employers whose:
      • Operations were fully or partially suspended due to a COVID-19-related shutdown order or
      • Gross receipts declined by more than 20 percent when compared to the prior year

      You may claim a refundable payroll tax credit for 70 percent of wages paid between March 12, 2020 and July 1, 2021, up to the first $10,000 of compensation, including health benefits, per employee, per quarter.
    • For eligible employers with 500 or fewer full-time employees, all employee wages qualify for the credit whether the employer is open for business or subject to a shut-down order. For employers with greater than 500 full-time employees, qualified wages are those wages paid to employees when they are not providing services due to COVID-19 related circumstances.
    • Note that the CARES Act prohibited claiming this tax credit if an employer is also claiming loans from the SBA PPP, but the PPP Flexibility Act struck this provision, so an employer can take advantage of both.
    • For more information, visit this page from the Senate Finance Committee and read these frequently asked questions provided by the IRS.
  • Economic Impact Payments for Individuals
    • The CARES Act provided a $1,200 ($2,400 married) individual economic impact payment for those who have an adjusted gross income up to $75,000 ($112,500 head of household; $150,000 married), are not a dependent of another taxpayer and have a Social Security number. Additionally, any dependent child (claimed for the child tax credit) under 17 added an additional $500.
    • The Economic Aid Act provides for an additional $600 payment per person (including dependent children under 17), under the same criteria.
    • This is true even for those who have no income as well as those whose income comes entirely from non-taxable means-tested benefit programs, such as SSI benefits.
    • For the vast majority of Americans, no action on their part will be required in order to receive a rebate check. The Internal Revenue Service will use a taxpayer’s 2019 tax return if filed, or in the alternative, their 2018 return. This includes low-income individuals who file a tax return in order to take advantage of the refundable Earned Income Tax Credit and Child Tax Credit. The government will use Social Security forms to get payments to seniors.
    • The rebate amount is reduced by $5 for each $100 that a taxpayer’s income exceeds the phase-out threshold. The amount is completely phased out for single filers with incomes exceeding $99,000, $146,500 for head of household filers with one child and $198,000 for joint filers with no children.





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