CARES Act Small Business Provisions

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April 3, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed by President Trump on March 27, 2020. This Act has certain provisions that apply to small businesses in need of assistance due to the pandemic. The programs listed below are primarily designed to help employers rehire or retain employees.

The CARES Act provides avenues of relief for those impacted by COVID-19 (CV):

  1. Paycheck Protection Program (PPP) is offered by the Small Business Association (SBA) through SBA-approved banks. PPP loans will be available to eligible employers from April 11, 2020 through June 30, 2020.
  2. Economic Injury Disaster Loans (EIDLs) are up to $2 million. Loan principal and interest deferments are for up to four years. The forgiveness qualifying expenses will be measured during an eight-week period. There are other qualifications you must meet. The EIDL period starts running from the date of the loan application. Certain other expenses (rent, utilities, and some interest) will also qualify as counting toward the forgiven amount. Employers can pick the eight weeks they want to count towards the covered period, any time from 2/15/20 to 6/30/20.
  3. Emergency Economic Injury Loan Advances are for up to $10,000. This loan advance does not need to be repaid under any circumstance, and may be used to keep employees on 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. The application can be found on SBA’s website.
  4. Small Business Debt Relief Program is a program intended to provide immediate relief to small businesses with non-disaster SBA loans—in particular, 7(a), 504, and microloans. SBA will cover all loan payments on these loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
  5. Employee Retention Credit  The Treasury Department and the Internal Revenue Service have launched the Employee Retention Credit, designed to encourage businesses to keep employees on their payrolls. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. An Eligible Employer may not receive the Employee Retention Credit if that employer receives a Small Business Interruption Loan under the PPP that is authorized under the CARES Act (“Paycheck Protection Loan”). An Eligible Employer that receives a paycheck protection loan should not claim Employee Retention Credits.

The above information is intended to provide general information on the CARE Act small business assistance provisions. This information is not intended to provide accounting, tax, or legal advice. Consultation with appropriate professionals is recommended.