While the first priority during a crisis like this will always be public health, it’s important to consider the effects the coronavirus pandemic will have on the national economy.
While the first priority during a crisis like this will always be public health, it’s important to consider the effects the coronavirus pandemic will have on the national economy. In order to mitigate these negative effects, congress recently passed the CARES Act, a $2 trillion economic relief package.
The CARES Act is intended to support the many pillars of the US economy during this difficult time, and that includes small businesses. $300 billion of the total devoted funds will be available for Small Business Administration (SBA) loan guarantees and subsidies and additional funding for SBA resources.
Important details include:
As a small business, nonprofit, or veteran organization, your eligibility is based on the following determinations:
Sole proprietors, independent contractors, and other self-employed individuals are also eligible. Furthermore, businesses in some industries with more than one physical location (but with no more than 500 employees per location) are also eligible.
Please note that you will be required to make good faith certification that you have been affected by COVID-19 and will use funds to retain workers and maintain payroll and other debt obligations. This will be determined by lenders.
The legislation lists a number of possible exclusions:
The CARES Act also makes a number of temporary changes to the terms of 7(a) loans:
Yes, the CARES Act offers two other provisions which may apply to your business:
Loan Forgiveness: You may be eligible for loan forgiveness in an amount equal to the amount you spend during an eight-week period after the origination date of the loan on the following items:
It’s important to note that the amount of the loan forgiven will be reduced in proportion to any reduction in employees retained compared to the prior year and to the reduction in pay of any employee beyond 25% of the prior year compensation.
Furthermore, if you rehire workers previously laid off, you will not be penalized for reducing payroll at the beginning of the period.
Emergency EIDL Grants: This emergency grant allows you to request an advance on your EIDL loan (up to $10,000), which the SBA must distribute within three days.
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