The CARES Act Explained: Part 2 | Small Business Relief
- Business Ownership
- Mike Wetzel
With the recent legislation passed by the U.S. Congress in the form of the CARES Act, many C&N customers rightfully have lots of questions. Our experts have developed a series of helpful summaries to better explain the key things you need to know and the relief options that may be available to you.
In Part 2 of our series, we explain the two provisions in the CARES Act that offer relief to small businesses: the introduction of the Paycheck Protection Program (PPP) and some lifted restrictions around Emergency Injury Disaster Loans. If you own a small business, it is particularly important to understand these programs. However, everyone can take an interest in understanding how this could affect our local economy or your own employer. Read on to learn more about these two programs.
The Paycheck Protection Program (PPP)
1. What is the PPP?
While the fine details of the program are still being determined, the Paycheck Protection Program, or PPP, provides small businesses with fully forgivable, unsecured, no-fee loans to help small businesses maintain up to 8 weeks of payroll costs and benefits during the coronavirus pandemic. Funds can also be used to pay interest on mortgages, rent and utilities but at least 75% of the forgiven amount must have been used for payroll. The loans are fully guaranteed by the Small Business Administration (SBA) and are made for two years at a 1.0% fixed rate with payments deferred for six months.
2. What Types of Businesses are Eligible?
Small businesses with 500 or fewer employees—including non-profits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships and independent contractors—are eligible. Businesses with more than 500 employees are eligible in certain industries.
3. What are the Requirements to Benefit from the PPP?
Loan forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines or if salaries and wages decrease.
4. How Can I Get Started?
Although this program is very new and the SBA is still finalizing the details and processes, rest assured that your C&N team is committed to helping our clients navigate this time of uncertainty. First, you can learn more details about the PPP here. Then, starting Friday, April 3, small business owners can apply online from the “COVID-19 Relief” button on the homepage to complete the online request. Our team of experts will guide you through the process from there.
Emergency Injury Disaster Loan
In response to the Coronavirus (COVID-19) pandemic, small business owners are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to help overcome the temporary loss of revenue small businesses are experiencing.
The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application and this loan advance will not have to be repaid. Economic Injury Disaster Loans are also available to residents in declared disaster areas. Here is a full list of disaster declarations.
It can be challenging to fully understand and decipher these changes when they are enacted. The C&N team is committed to keeping you informed & prepared as more details of the CARES Act are reviewed and better understood. You can look for the next part of our series, “The CARES Act Explained,” to be published soon.