SMALL BUSINESS OWNER’S GUIDE TO THE CARES ACT
Last week Congress passed the CARES Act, which President Trump signed into law on Friday. CARES stands for ‘Coronavirus Aid, Relief and Economic Security’ Act. It is a $2.1 TRILLION emergency aid bill with three broad buckets: loans, direct relief and supplemental spending.
Fortunately, so you can quickly digest the CARES Act, the U.S. Senate Committee on Small Business and Entrepreneurship has published “The Small Business Owner’s Guide to the CARES ACT.”
Here are some key elements in The Guide:
1) Paycheck Protection Program (PPP) Loans
The PPP program provides cash-flow assistance through a 100 percent federally guaranteed loans to employers who maintain payroll during the COVID-19 emergency. This program is for small businesses with fewer than 500 employees and the maximum loan amount is $10 million. The loan can be used for business operating cost such as workforce (group health benefits, pay, sick leave, and local and state taxes assessed on employee compensation, etc.); utilities, rent and other costs.
2) Small Business Debt Relief Program
This program provides immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. The Small Business Administration will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months.
3) Economic Injury Disaster Loans/Emergency Grants
If your business needs immediate cash, apply for an SBA Economic Injury Disaster Loan (EIDL pronounces ‘idle’). This is for grants within 3 days of application for emergency funds up to $10,000 to small businesses harmed by COVID-19. No repayment is necessary. The money can be used “to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.” Again, this program is for businesses with fewer than 500 employees.
4) Counseling and Training
If your company needs guidance through COVID-19 caused challenges look to a local Small Business Development Center, Woman’s Business Center, or SCORE which are receiving funding to increase their capacity to provide free business counseling and inexpensive training.
If you are a government contractor, terms and conditions of your contracts may be modified, and you may be reimbursed due to COVID-19-related closures of federal facilities.
6) Small Business Tax Provisions
The CARES Act provides “a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis… Wages of employees who are furloughed or face reduced hours…are eligible for the credit…”
That’s a very cursory overview. Again, you can find “The Small Business Owner’s Guide to the CARES ACT” here.