CARES ACT – SMALL BUSINESSES

There are two main programs to consider for small businesses. These are the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). Other programs exist as well, but require further evidence of harm caused by the coronavirus. Below is a summary of the programs and how to apply. Eligibility is based on size of business, which must be considered small under the Small Business Administration (SBA) guidelines. It also is my understanding that you can apply for both of these loans, but apparently must use the funds for different items.

Paycheck Protection Program (PPP):

·   Total amount – up to 2.5x monthly payroll costs (payroll costs are broadly defined and you can find what’s included on page 3 of this pdf - https://www.uschamber.com/sites/default/files/023595_comm_corona_virus_smallbiz_loan_final.pdf. If I understand it correctly, what you typically pay yourself as a business owner is included in payroll.)

·   Forgivable? – If you maintain staff and use the proceeds for payroll, yes, although the next section from the Small Business Administration gives a little more clarity on this.

·   From the Small Business Administration (SBA) website – “The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels.  Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”

·   Where to apply – This loan is offered through SBA-approved local banks/lenders. If you have a banking relationship, we encourage you to reach out to them as most banks are prioritizing current customers.

·   Timeline – Local lenders/banks are currently accepting applications.

More details – https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp

Application sample -

https://www.sba.gov/sites/default/files/2020-04/PPP%20Borrower%20Application%20Form_0.pdf

 Economic Injury Disaster Loan (EIDL):

·   Total amount – up to $2 million

·   Forgivable? – No, although there is some confusion over the conditions under which the $10k advance is forgivable.

·   Terms – 3.75% interest, up to 30 years pay-off period, collateral required for loans above $25k, although this apparently is flexible at the moment.

·   Timeline – Currently accepting applications directly through the SBA.

·   Where to apply –https://covid19relief.sba.gov/#/