What’s actually in the CARES Act for Small Businesses?

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Emergency Economic Injury Disaster Loans

  • EIDLs, made through the SBA, have been available for roughly two weeks now. 
  • They offer 3.75% interest rates. With repayment options for a period of up to 30 years, determined on a case-by-case basis.
  • The Eligible Expenses are:
    • Fixed Debts
    • Payroll
    • Accounts payable, and,
    • Other bills which can’t be paid because of the coronavirus
    • Apply here

Emergency Economic Injury Disaster Loan Grants

  • Available to small businesses as well as sole proprietors, independent contractors, and a few other niche situations.
  • An advance of up to $10,000 dollars within 3 days of applying
  • Application for the grant is done while applying for the above EIDL here
  • These will not need to be repaid, even if you don’t qualify for an EIDL
  • The Eligible Expenses are:
    • Providing paid sick leave to employees directly impacted by COVID-19
    • Maintaining Payroll during disruptions and slowdowns
    • Meeting increased costs to obtain materials due to interrupted supply chains
    • Making rent or mortgage payments; and
    • Repaying Obligations that cannot be met due to revenue losses.
    • Can be rolled into Payment Protection Project Loans

Payment Protection Program

  • Amount totaling 2.5x average monthly payroll 
  • Average monthly payroll will be:
    • The average total monthly payments for the 12 months prior
    • The average of total monthly payments for the 12 week period beginning on either 2/15/19 or 3/1/19 for seasonal employers
    • The average of total monthly payments for the period of 1/1/20 to 2/29/20 for business not in business during 2/15/2019 to 6/30/2019
  • The Eligible Expenses are:
    • Payroll Costs
    • Group Healthcare costs during periods of paid sick, medical, or family leave, and insurance premiums
    • Interest payments on mortgage obligations (not prepayments or principal payments)
    • Rent (including rent under a lease agreement)
    • Utilities; and
    • Interest on any other debt obligations that were incurred before 2/15/2020
  • An EIDL loan made after 1/31/2020 before PPP loans are made available may be refinanced into a PPP loan
  • Forgiveness
    • Loan money spent on payroll costs, mortgage interest, rent, or utilities will be forgiven proportionally to
    • The average number of full time employees from 2/15/2020 to 6/30/2020 compared to the same period in 2019, or;
    • For seasonal employers the average number of full time employees from 2/15/2020 to 6/30/2020 compared to 2/15/2019 – 6/30/2019, or; 
    • The average number of full time employees from 2/15/2020 to 6/30/2020 compared to 1/1/2020 to 2/29/2020, or;
    • The loan forgiveness can be calculated without consideration of a reduction of full time employees or wages if:
      • A reduction in staff or wages occurred between 2/15/2020 and 4/26/2020 and by 6/30/2020 the reduction is eliminated

Subsidy for Certain 7(a) or Other Small Business Loans

  • The SBA will cover all principal, interest, and associated fees of covered loans for the next six payments 
  • Contact your financial institution to see if your SBA loans qualify for this relief
  • In addition to the six months of direct payments, Congress is recommending lenders provide payment deferments when appropriate