On Friday, March 27 the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, creating a number of new programs to help small businesses with the impact of COVID-19. A full guide to the CARES act is attached at the bottom of this post.
Below is some helpful information from the Senate Committee on Small Business and Entrepreneurship to determine if any of these programs are right for your business if you need:
Paycheck Protection Program Loans
The program will provide cash-flow assistance through 100 percent federally guaranteed
loans to employers who maintain their payroll during this emergency. If employers maintain
their payroll, the loans will be forgiven. PPP loans include forgiveness of up to eight weeks of payroll based on employee retention and salary levels, no SBA fees, and at least six months of deferral with maximum deferrals of up to a year.
Who is eligible? Small businesses (with under 500 employees), individuals who operate a sole proprietorship or as an independent contractor, and eligible self-employed individuals can apply for PPP loans.
What are the loan term, interest rates, and fees? For any amounts not forgiven, the maximum term is 10 years, the maximum interest rate is 4 percent, zero loan fees, zero prepayment fee (SBA will establish application fees caps for lenders that charge).
How is the forgiveness amount calculated? Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered eight week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000)
Where should I go to get a PPP loan from? All current SBA 7(a) lenders are eligible lenders for PPP. The Department of Treasury will also be in charge of authorizing new lenders, including nonbank lenders, to help meet the needs of small business owners.
Emergency Economic Injury Grant
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 the 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.
Who is eligible? Small businesses with less than 500 employees, sole proprietorships, with or without employees, independent contractors, cooperatives and employee-owned businesses.
Where should I go for more information? SBA resource partners are available to help guide you through the EIDL application process. You can find the nearest Small Business Development Center (SBDC), Women’s Business Center, or SCORE mentorship chapter at https://www.sba.gov/localassistance/find/.
If you need a business counselor to help guide you through this uncertain time, you can turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support, small business owners, with counseling and up-to-date information regarding COVID-19.
To find a local resource partner, visit https://www.sba.gov/local-assistance/find/.