The U.S. CARES Act:
What Does It Mean for Your Business?
03.30.2020 By: Marron A. Mahoney
The U.S. Congress recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which includes programs and initiatives to support small businesses during the coronavirus crisis. Here are a few programs from the CARES Act that will soon be available from the Small Business Administration (SBA) that could assist your small business weather these unprecedented times.
1) Paycheck Protection Program (PPP) Loans
This program will provide cash-flow assistance to employers through 100% federally guaranteed loans. The loans are available for employers are who maintaining their payroll during the coronavirus emergency and are eligible to be forgiven if the payroll is maintained. Borrowers are eligible for loan forgiveness for up to eight weeks of their payroll, based on employee retention and salary levels.
Who is eligible? Businesses and entities must have been in operation on February 15, 2020. Small business, other business concerns, nonprofits, and veterans’ organizations that generally have fewer than 500 employees; sole proprietorships, independent contractors, and certain self-employed individuals, among others.
What can the loans proceeds cover? Eligible costs include payroll costs, employee salaries, wages, and commissions; costs related to continuation of group health care benefits during periods of paid sick, medical, and family leave, and insurance premiums; interest payments for mortgage obligations; rent; and utilities.
How is loan size calculated? In general, the maximum loan amount is equal to 250 percent of average monthly payroll costs, with a maximum of $10 million. The time period for calculating the monthly average payroll varies depending on when you were business.
2) Small Business Debt Relief Program
Under this program, SBA will cover all loan payments for non-disaster SBA loans—7(a), 504, and microloans—for six months. The loan relief will include payments for principal, interest, and fees. Debt relief under this program will not apply to PPP loans.
3) Economic Injury Disaster Loans & Emergency Economic Injury Grants
Small businesses applying for an SBA Economic Injury Disaster Loan (EIDL) are eligible for an emergency advance grant of up to $10,000. The advance does not need to be repaid under any circumstances.
The advance can be used to maintain employees on payroll, pay for sick leave, address increased production costs attributable to supply chain disruptions, or pay certain business obligations, including debts, rent, and mortgage payments.
For assistance in applying for an available SBA loan, visit https://www.sba.gov/local-assistance/find/ to locate an SBA Resource Partner.
For more information about how the CARES Act can help your small business, check out The Small Business Owner’s Guide to the CARES Act from the U.S. Senate Committee on Business and Entrepreneurship, available at https://www.sbc.senate.gov/public/index.cfm/guide-to-the-cares-act
For more information – please contact: Marron A. Mahoney Email: mmahoney@msclawfirm.com