On March 27, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), a $2 trillion stimulus package responding to the public health and economic crises associated with the COVID-19 pandemic. To support the small businesses and technology companies in the XR ecosystem that are facing unprecedented economic strain, this page highlights sections of the CARES Act with potential relevance to the XR community. While it will take time for government agencies to promulgate regulations to implement this stimulus package (for example, the Small Business Administration is directed to do so within 15 days of enactment of the CARES Act), interested companies should be aware of the economic support for which they are eligible.

CARES Act Support for Smaller Businesses (500 or Fewer Employees)

The Paycheck Protection Program: $349 Billion Dollars Available for Loans to Maintain Existing Workforce and Pay for Expenses (e.g. rent, mortgage, and utilities). The CARES Act provides $349 billion for loans to businesses of 500 or fewer employees, through existing SBA-certified lenders like banks and credit unions. The amount to each applicant is based on such factors as the applicant’s average monthly payroll, mortgage, rent, utility payments, and existing debt obligations, up to $10 million. Businesses which keep their employees and payroll levels between March 1 and June 30 can use any part of the loan to cover payroll and related payments and have that portion of the loan forgiven. The loan period for this program would begin on February 15, 2020, and end on December 31, 2020.

Loan Forgiveness Must Meet the Following Criteria:

  • Borrowers will be eligible to apply for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the loan closing date on payroll costs (including payments to tipped workers), interest on mortgages, payments of rent, and utility payments in place before February 15, 2020.
  • Borrowers which re-hire workers previously laid off from February 15 through April 1, 2020 shall not have those numbers counted against them during such period for loan forgiveness purposes, so long as the workers are rehired by June 30, 2020.
  • Cancelled indebtedness is excluded from the borrower’s taxable income.
  • Once a lender reports the expected loan forgiveness for a covered loan or pool of covered loans, the SBA will purchase that amount of the loan from the lender, thereby providing for the full forgiveness of the loan.

Four Percent Interest Cap on Revolving Credit Line for Other Uses. The CARES Act increases the maximum loan amount for SBA Express loans from $350,000 to $1 million. It also expands the allowable uses for revolving credit lines to provide working capital under the 7(a) Small Business Administration loan program to include:

  • Payroll support
  • Supply chain disruptions
  • Mortgage payments
  • Any other debt obligations

For more information on this program please go to the SBA website.

$265 Million for Entrepreneurial Development Programs. Grants under this program will provide funds to research partners with the goal of establishing a centralized hub for COVID-19 information. More information here.

$10 Million Set Aside for Minority Business Development Agency. The final CARES Act newly defines a minority business as a for-profit business enterprise where at least 51 percent of the business is owned by what the Minority Business Development Agency deems socially disadvantaged individuals. It provides $10 million for education and training of those minority businesses. More information here.

Expanded SBA Disaster Loan Program. The CARES Act declares the entire country of the United States to be within a disaster area. Any business with 500 or fewer employees is, subject to its ability to repay, qualified to receive up to $2 million in disaster loans based solely on credit scores (no tax return submission required) or through “alternative appropriate methods to determine an applicant’s ability to repay.”

  • Entities applying for loans under the Disaster Loan Program in response to COVID-19 may request an emergency advance from the SBA of up to $10,000, which does not have to be repaid, even if the loan application is later denied.
  • The SBA is charged with verifying an applicant’s eligibility by accepting a “self-certification.”
  • Loans can be applied for online here.
  • Advances are to be awarded within three days of an application.
  • The funds can be used for any of the existing purposes authorized under the Disaster Loan Program, including providing sick leave to employees unable to work due to the direct effects of COVID-19; maintaining payroll during business disruptions; meeting increased supply chain costs; making rent on mortgage payments; and repaying debts that cannot be paid due to lost revenue.
  • To prevent double-dipping, amounts provided for an emergency advance or other SBA business loan will be reduced by any amounts paid for forgiving payroll costs.
  • The interest rate on SBA disaster loans is 3.75 percent for small businesses. The interest rate for non-profits is 2.75 percent.

CARES Act Support for Technology and Telecommunications

The CARES Act allocates funding to relevant technology and telecommunications companies in two areas: direct technology funding through support for broadband deployment, telehealth/telemedicine, broadcast, and technology resilience/infrastructure reinforcement; and indirect technology funding through support for telework and distance learning. Until associated agencies disseminate regulations on the distribution of these funds, it is unclear whether XR technologies will be eligible, but we will continue to monitor the situation for updates.

Funding for Telehealth, Telemedicine, and Broadband: A number of provisions in the Act provide funding for telehealth and telemedicine response to COVID-19, including the following:

  • Federal Communications Commission (FCC). Title V provides $200 million to the FCC for COVID-19 response, including supporting telehealth and telemedicine.
  • Rural Utilities Service (RUS). Title I provides $25 million to the Department of Agriculture to support the RUS Distance Learning and Telemedicine program. It also provides $100 million to the ReConnect program to support rural access to broadband.
  • Indian Health Service (IHS). Title VII provides $1.032 billion for IHS to respond to the pandemic, including investments for telehealth services and electronic health record modernization.
  • The Department of Veterans Affairs. Title X provides $2.15 billion for information technology systems, $14.432 billion for medical services, $2.1 billion for medical community care, and $100 million for medical support and compliance. It allows the VA to enter into agreements with telecommunications companies to provide broadband for veterans in support of providing telehealth mental health care; and broadens the capability for telehealth visits.
  • Public Health and Social Services Emergency Fund. Title VIII provides $27 billion for medical response efforts, including increased telehealth access and infrastructure to increase access to digital healthcare delivery.
  • Health Resources and Services Administration — Rural Health. Title VIII provides $185 million to support rural health initiatives, including tribal health and telehealth programs.

Funding for Teleworking and Distance Education: The following entities will receive funding that by the terms of the statute may be used in part to increase or strengthen teleworking or distance education capacity:

  • Bureau of Indian Affairs. Title VII, $453 million.
  • Institutions of Higher Education. Title VIII, $14.250 billion.
  • Institutions of Elementary and Secondary Education. Title VIII, $13.5 billion available through the states.
  • United States Agency for International Development. Title XI, $95 million for operational needs.
  • Coast Guard. Title VI, $141 million.
  • Forest Service. Title VII, $70 million.
  • Environmental Protection Agency. Title VII, $7.2 million.
  • Department of the Interior, Office of the Secretary. Title VII: $158.4 million (funding includes other bureaus).
  • Social Security Administration. Title VIII, $300 million.
  • United States Senate. Title IX, $10 million.
  • United States House of Representatives. Title IX, $25 million.
  • Department of Justice. Title II, $55 million across the Department of Justice, including the FBI, DEA, U.S. Marshals Service, and U.S. Attorneys.
  • U.S. Capitol Police. Title IX, $12 million.
  • Bureau of Indian Education. Title VII, $69 million for response needs at BIE-funded schools.
  • U.S. Army Corps of Engineers. Title IV, $70 million.
  • Bureau of Reclamation. Title IV, $20.6 million.
  • Internal Revenue Service. Title V, $250 million.
  • State, local, territorial, and tribal governments. Title VI, $100 million in Emergency Management Performance Grants.
  • Federal Emergency Management Agency. Title VI, $45 million.
  • Department of Housing and Urban Development. Title XII, $35 million.