CARES Act: Understanding How it Became a Law in the United States

November 4, 2022 - 3:48 am - 4 min read

What is CARES Act?

The CARES Act or the Coronavirus Aid, Relief, and Economic Security Act is a law passed by the United States Congress on March 27, 2020. It is an economic relief package aimed at helping individuals, families, businesses, and non-profit organizations affected by the COVID-19 pandemic. The law provides for direct cash payments to eligible taxpayers, small business loans and grants, unemployment insurance benefits, and other provisions to mitigate the impact of the pandemic.

How did it become a law?

The CARES Act was born out of the unprecedented public health crisis brought about by the COVID-19 pandemic. As businesses were shut down, millions of Americans lost their jobs, and the economy suffered a massive hit. To address these pressing issues, the United States Congress took action and introduced a series of bills aimed at providing economic relief.

The CARES Act started as a $2.2 trillion economic stimulus package, one of the largest ever passed in United States history. The bill, initially known as the Health and Economic Recovery Omnibus Emergency Solutions Act, was introduced to the House of Representatives in May 2020. After several rounds of negotiations, both the House and Senate passed the final version of the bill on March 27, 2020, with strong bipartisan support.

The Provisions of CARES Act

The CARES Act has several provisions that aim to cushion the impact of the COVID-19 pandemic on the United States economy. The following are some of the key provisions of the law:

Direct Cash Payments

The CARES Act provides for direct cash payments to eligible taxpayers. Individuals receive up to $1,200, while married couples receive up to $2,400. Additionally, eligible parents receive $500 for each child under the age of 17.

Small Business Loans and Grants

Small businesses and non-profits with fewer than 500 employees can apply for loans of up to $10 million through the Paycheck Protection Program. The loans can be used to pay for salaries, rent, and other business expenses. The law also provides for grants of up to $10,000 for small businesses affected by the pandemic.

Unemployment Insurance Benefits

The CARES Act extends unemployment insurance benefits to individuals who lose their jobs due to COVID-19. The law provides an additional $600 per week in federal unemployment insurance on top of state unemployment benefits for up to four months.

Hospital Funding

The CARES Act provides $100 billion in funding to help hospitals and other healthcare providers address the COVID-19 pandemic. The funding is used to cover expenses related to testing, treating, and preventing COVID-19, including purchasing personal protective equipment (PPE) and increasing hospital capacity.

Tax Relief Measures

The CARES Act includes several tax relief measures, including temporarily waiving the 10% early withdrawal penalty for retirement account distributions of up to $100,000. The law also allows for increased tax deductions for charitable contributions made in 2020.

The Impact of CARES Act

The CARES Act has had a significant impact on the United States economy. The direct cash payments have provided much-needed relief to millions of households affected by the COVID-19 pandemic. Small businesses and non-profits have been able to stay afloat thanks to the loans and grants provided under the law.

The unemployment insurance benefits have provided a crucial safety net for individuals who have lost their jobs due to the pandemic. Healthcare providers and hospitals have received much-needed funding to address the COVID-19 crisis. The tax relief measures have provided some relief to individuals and businesses facing financial hardship due to the pandemic.


The CARES Act is a landmark law that provides much-needed economic relief to individuals, families, businesses, and non-profit organizations affected by the COVID-19 pandemic. The law’s provisions have had a significant impact on the United States economy, providing a crucial safety net to millions of Americans facing financial hardship. While the pandemic continues to rage on, the CARES Act serves as a beacon of hope and resilience for the American people.


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