U.S. Congress advances $2.2 trillion in COVID-19 relief

Relief package is largest in U.S. history and includes loan provisions to assist financial service firms

26 March 2020


In response to the COVID-19 outbreak, the U.S. Congress is poised to pass bipartisan economic rescue legislation that will provide $2.2 trillion in resources for households and businesses facing economic hardship as well as health professionals combating the virus. The Senate voted unanimously, 96-0, to send the bill to the House of Representatives. It would be the third measure passed by Congress aimed at addressing the crisis, and it may not be the last.

This unprecedented relief – the largest in U.S. history – seeks to address the challenges faced by all Americans due to the COVID-19 outbreak. While the provisions included in the package are not aimed specifically at the derivatives industry, the package will undoubtedly have an impact on the markets and some provisions may benefit certain FIA member firms.

Highlights of the Coronavirus Aid, Relief, and Economic Security (CARES) Act:


Includes proposals and resources to expand testing, address drug shortages, ensure laboratory-developed tests are free, hire more health care workers, manufacture more personal protective equipment, and speed the development of new vaccines and treatments.


Direct assistance of up to $1,200 will be sent to most taxpayers, providing cash immediately to individuals and families. Married couples who file a joint return are eligible for up to $2,400. Those amounts increase by $500 for every child. The amounts are reduced and eventually phased out for higher income taxpayers.


Broadly, Congress added provisions to help businesses survive this unpredictable crisis:

Treasury Stabilization Fund

  • Provides $500 billion to the Treasury’s Exchange Stabilization Fund to provide loans, loan guarantees, and other investments to the transportation industry, businesses important to maintaining national security, and investments to eligible businesses, states, and municipalities to mitigate any downturn in credit and money markets that would otherwise have severe consequences on the broader economy.

Small Businesses

  • Authorizes $349 billion in Small Business Administration loans available to businesses with 500 employees or fewer to prevent workers from losing their jobs and small businesses from going bankrupt.

  • If employers maintain their payroll, the loans will be forgiven. Additionally, funding through this program can be used to cover payroll costs, paid sick leave, supply chain disruptions, employee salaries, health insurance premiums, mortgage payments, and other debt obligations to provide immediate access to capital for small businesses who have been impacted by COVID-19.

Tax Relief

  • Relaxes the limitations on a company’s use of net operating losses (NOL) arising in prior tax years and temporarily removes the taxable income limitation to allow a NOL to fully offset income. These changes will allow companies to utilize losses and amend prior year returns, which will provide critical cash flow and liquidity during the COVID-19 emergency.

  • Temporarily increases the amount of interest expense businesses can deduct on their tax returns for 2019 and 2020.

  • Accelerates the ability of companies to recover unused alternative minimum tax (AMT) credits, permitting companies to claim a refund now and obtain additional cash flow during the COVID-19 emergency.

  • Provides a refundable payroll tax credit for 50% of wages paid by employers to employees during the crisis. The credit is available to employers whose operations were fully or partially suspended due to the crisis, or whose gross receipts declined by 50% when compared to the same quarter in the prior year. Notably, the credit is not limited to small employers, but for employers with over 100 employees, wages are limited to those paid to employees who are not able to provide services due to the crisis. The credit limited to the first $10,000 of compensation including health care and paid or incurred from March 13, 2020 through December 31, 2020. Small employers participating in the Paycheck Protection Program cannot take the tax credit.

  • Employers may delay payment of payroll taxes and be paid over the following two years.

FIA continues to monitor the latest developments related to COVID-19 and its impact on the global cleared derivatives industry. To access the latest operational, legal and regulatory updates from exchanges, CCPs and market regulators around the world, please visit the new website, and the dedicated page to the COVID-19 response.

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