Small Businesses Stimulus Package Overview
The CARES Act
Congress recently passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act which features a number of programs and initiatives to assist small business owners with a variety of immediate financial needs. I am providing an overview of some of what, as a small business owner myself, I consider to be the most relevant aspects of the stimulus package.
This is merely a brief overview. When the programs and initiatives are implemented there will be many more resources available for small businesses through the Small Business Administration (SBA).
The idea is to keep as many people as possible on the payroll, so the economy does not come to a complete standstill. If employees can continue paying their bills and meeting their responsibilities we can get through this unprecedented time one step at a time all together.
Paycheck Protection Program (PPP) Loans
Ensuring that employees have jobs to return to if they cannot accomplish their work at home, is integral to getting the economy rolling once this virus is behind as we each do our part to help get it under control. This program would provide cash-flow assistance through 100% federally guaranteed loans to employers who maintain their payroll throughout this emergency. If employers do maintain their payroll, the loans would be forgiven.
In order to be eligible for a PPP loan, you must have been in operation on or before February 15, 2020. Your business concern which includes 501© (3) nonprofits, veterans organizations or Tribal business concern, must have fewer than 500 employers, or the applicable size standard for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher. Individuals who operate a sole proprietorship or is an independent contractor and eligible self-employed individuals are also eligible.
Eligible Payroll Costs
The coverage is wide reaching for the PPP Loans. Costs include:
•Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
•Payment for vacation, parental, family, medical or sick leave
•Allowance for dismissal or separation
•Payment required for the provisions of group health care benefits, including insurance premiums
•Payment of any retirement benefit
•Payment of State or local tax assessed on the compensation of employees
Small Business Debt Relief Program
This aspect of the program is designed to provide immediate relief to small business with non-disaster SBA loans. Under this program, 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 months of the President signing the bill into law.
Economic Injury Disaster Loans And Emergency Economic Injury Grants
These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may 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.
How To Apply For Stimulus Programs
To keep up to date on when these programs become available, please reach out to and stay in contact with your local Small Business Administration (SBA) District Office. Whether you require capital to cover the cost of retaining employees, a quick infusion of a smaller amount of cash to cover you immediately, help keeping up with payments on your current or potential SBA loan or just some quality, free counseling to help you navigate this uncertain time, your SBA District Office will be able to direct you on how to apply for specific programs.
I hope this overview helps ease some of the anxiety you as a small business owner may be experiencing. We will get through this time of uncertainty if we just keep taking precautions and take care of each other. Please stay well, stay safe and stay the course.