Small Business Help and The CARES Act
There is specific Small Business Help in The CARES Act under Divisions A and B. The protections are set up as loan and grant programs and expand the terms of SBA Loans. The programs are quite generous and helpful and worth investigating. The options for Small Business Protection in The CARES Act are as follows:
Emergency Economic Injury Disaster Loan (EIDL)
This loan is available to:
1. Businesses with less than 500 employees; and
2. Sole Proprietors/Independent Contractors
The Program Expands Eligibility as follows:
1. Max Express Loan is increased from $350,000 to $1 million;
2. No Personal Guarantee or Collateral required for loans up to $200,000;
3. No requirement a business be in operation for at least one year; and
4. No requirement to prove business is unable to obtain credit elsewhere.
The Program’s Main Benefit:
1. Businesses may receive a $10,000 emergency advance within 3 days after applying for an EIDL.
2. If the Business is denied an EIDL, the Business DOES NOT have to repay the $10,000 advance!
3. The Loan or $10,000 advance must be used for:
a. Payroll costs;
b. Increased material costs;
c. Rent or mortgage payments; or
d. Repaying obligations that cannot be paid due to lost revenue
THE LINK TO APPLY FOR THE LOAN AND ADVANCE:
https://covid19relief.sba.gov/#/
Payroll Protection Program (PPP)
The PPP provides:
1. Cash-flow assistance for employers who maintain their payroll during this emergency;
2. If employers maintain their payroll, the loans may be forgiven;
3. No SBA fees;
4. 6 months to 1-year deferral on repayment; and
5. The loan max amount is 250 % of a business’s average payroll costs.
To qualify:
Business in operation as of February 15, 2020 and Have less than 500 employees or be a Sole Proprietor/Independent Contractor
Eligible Costs:
1. Employee Compensation; 2. Paid Time Off Extensions; 3. Health Benefits; 4. Retirement Benefits; 5. State and Local tax associated with employee compensation; 6. Mortgage Interest; 7. Rent; 8. Utilities; and 9. Interest on any other Debt Obligations incurred before February 15, 2020.
Loan Terms:
Max of 10 years; Max interest of 4%; No loan fees or prepayment penalties
MAY BE FULLY FORGIVEN if:
a. Used for the above costs; and
b. Present Certified Documentation confirming the use.
How to Obtain:
1. Fill out the application by clicking below:
https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
2. Submit application to an approved lender, which may be found by clicking below:
https://www.sba.gov/paycheckprotection/find
Small Business Debt Relief Program
Provides immediate debt relief for 6 months by paying the Principal, Interest, and Fees on any existing non-disaster related SBA loan of a business with under 500 employees or a Sole Proprietor/Independent Contractor.
1. Also Applies to loans taken out within 6 months of the CARES Act becoming law on March 27, 2020. Therefore, small businesses or start-ups may apply for a non-disaster SBA loan and all payments/costs will be deferred for 6 months.
2. For more information click here:
https://www.sba.gov/partners/lenders/7a-loan-program/types-7a-loans
Small Business Tax Breaks
1. Required Estimated Tax Payments are deferred to October 15, 2020; and
2. Employer Portion of Payroll Taxes (FICA) in 2020 deferred and due in two installments, one at the end of 2021 and the other at the end of 2022.
In this uncertain, stressful, and frightening time for Small Businesses, Sole Proprietors, and Independent Contractors, it is worthwhile to investigate and apply for one or more of the loan/grant programs listed above. Especially the $10,000 emergency advance that may be forgiven; there may be nothing to lose.
I wish the BEST OF LUCK to all Small Businesses and Self-Employed persons during this challenging time.
If you have further questions about these loans and incentives, please contact me at:
215-291-2944 or ppeters@thepetersfirm.com
