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

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