On March 27, 2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act contains many provisions for businesses and individuals, but the most impactful provisions for small businesses in the immediate term are the Economic Impact Disaster Loan/Grants and Paycheck Protection Program loans.
The Economic Injury Disaster Loans will give you an immediate $10,000 grant that does not have to be repaid to cover payroll and other expenses where your business has been affected ty the coronavirus. You would apply for this grant by going directly to the Small Business Administration. The link is sba.gov/funding-programs/disaster-assistance. The Paycheck Protection Program loan will provide up to $349 billion of federally guaranteed loans for small businesses. The loans are being issued by qualified SBA lenders (banks) and will be available until June 30, 2020, or until funds run out.
Businesses with 500 or fewer employees, which were operational on February 15, 2020, are generally eligible for 2½ times the business’s average monthly payroll over either the prior 12 months, or for 2019 (up to a maximum loan of $10 million). Some of the loan may be forgiven, and for the remaining debt, the interest rate will only be 1%. NOTE, YOU COULD BE ELIGIBLE FOR THIS EVEN THOUGH YOU HAD NO EMPLOYEES.
The Paycheck Protection Program loans can be used for the following expenses:
• Payroll costs (up to $100,000 per employee);
• Group health coverage;
• Business occupancy costs (mortgage interest, rent, and utilities); and
• Interest on other loan obligations.
The loans may be forgiven for amounts used for these expenses for up to eight weeks from the loan origination date. However, loan forgiveness will be reduced by reductions in employee compensation, or layoffs of employees during the period of February 15, 2020, through June 30, 2020.
Any loan amount that isn’t forgiven has a term of 2 years, and an interest rate of 1%. No payments will be required for the first six months, though interest will continue to accrue during that time.
We suggest that you reach out to your existing banking institution to determine whether they are a participating lender.
We are in the process of establishing a list of qualified small business lenders throughout the country. They will be uploaded to our website shortly.
Paycheck Protection Plan FAQs
https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequenty-Asked-Questions.pdf
