Small Business Relief Funding Expands Under CARES Act

March 31, 2020

Important Small Business Relief updates related to the CARES ACT
Coronavirus Aid, Relief, and Economic Security Act Details:

First, is my business eligible if I have over 500 employees?  Yes, possibly.

Depending on your industry, a small business can be a business with a maximum of 250 empSloyees or a maxium of 1,500 employees.  This includes sole proprietorships, LLC’s, corporation and non-profits.  For those unsure if they meet industry guidelines, they can check our website (EDAscc.com) or the SBA.gov website.  https://www.sba.gov/document/support--table-size-standards

Need capital to cover the cost of retaining employees? Then this program may be right for you:

Paycheck Protection Program (PPP)
Paycheck Protection Program (PPP) is a forgivable loan to small businesses to pay their employees during the COVID-10 crisis.  Payroll costs are capped at $100,000 on an annualized basis for each employee, a portion of no more than 25% of the forgiven amount can be used to cover rent, utility costs and most mortgage interest over the 8 week period after the loan is made.  Employee and compensation levels must be maintained.   

Program highlights:

• All loan terms will be the same for everyone.
• The loan amounts will be forgiven as long as:
  • The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and
  • Employee and compensation levels are maintained.
• Payroll costs are capped at $100,000 on an annualized basis for each employee.
• Loan payments will be deferred for 6 months.
• Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
• Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
• All businesses, including nonprofits, with 500 or fewer employees can apply for this program. Businesses in certain industries can have more than 500 employees if they meet applicable SBA employee-based size standards for those industries.
• You will need to complete the Paycheck Protection Program loan application and submit the application with the required documentation to an approved lender by June 30, 2020.
• The SBA requirement that you try to obtain loan funding for other sources first is waived for PPP.
• You can only take out one (1) loan under this program.
• Loans can be used for:
  • Payroll costs, including benefits;
  • Interest in mortgage obligation, incurred before February 15, 2020;
  • Rent, under lease agreements in force before February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.

Does your business need a quick infusion of a smaller amount of cash to cover you right now?
Then you may wish to consider: 

SBA Economic Injury Disaster Loan (EIDL) - $10,000 Advance
EIDL Advance of $10,000 is now live.  Clients who applied to EIDL should have received an email from SBA to reapply to new application and on page 4 check the box which asks if they want to take the advance.  Client may take up to $10,000 and will be forgiven.  New link and updated application (which is very simple) is https://covid19relief.sba.gov/#/

To ease your fears about keeping up with payments on your current or potential SBA loan?
Then you may wish to consider: 

Small Business Debt Relief Program

This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans.  Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months.  This relief will also be available to new borrowers who take out loans within six month of the President signing the bill into law.

IMPORTANT NOTE: It is important to not rush in making a decision.  Take time to evaluate each program and apply for the program best suited for your business.  Keep in mind, if you take the Economic Injury Disaster Loan, you cannot apply for the Paycheck Protection Program.  Each business needs to understand which program will be best based on their needs.   

These flyers will give you more in-depth details about each:
 

CARES Act
Small Business Owners Guide to CARES Act
Paycheck Protection Program Overview
Paycheck Protection Program Fact Sheet