In the midst of the Coronavirus pandemic, stay-at-home orders and the closure of non-essential businesses are just a few of the measures that have been passed in an effort to protect the well-being of everyone. These same protective measures have, however, had staggering impacts on small businesses across the country. Closures and layoffs have happened in rapid succession. To try and boost small businesses and the U.S. economy, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress on March 27th.
What Does the Coronavirus Aid, Relief, and Economic Security (CARES) Act Provide for Small Businesses?
There are several ways small businesses can seek support under the CARES Act. One of the biggest provisions of the Act is the establishment of the Paycheck Protection Program. The program is made up of $350 billion in government-back loans to help cover payroll costs of eligible small businesses through June of 2020. Those who qualify for this program may apply to borrow up to 2.5 times their average eligible monthly payroll costs, up to $10 million. The interest rates on the loan do not go above 4% and, if the employer does not make any layoffs or reduce the wages of any employees, the loan will be forgiven entirely.
For those small businesses needing a fast cash infusion to help keep afloat during this time, relief may be found under the CARES Act expansion of the Small Business Associations Economic Injury Disaster Loan (EIDL) program. This program was expanded to offer financial support to a broader range of businesses during the pandemic. Usually, SBA offers this type of disaster relief in specific locations where a federally declared disaster has taken place. In this case, however, the Coronavirus pandemic has hit the entire country at once. That is why the program has expanded to all 50 states, and Washington D.C. as well as U.S. territories. EIDL offers small businesses an emergency advance of up to $10,000 in addition to the loan amount. The loan and advance may be used to cover payroll costs, pay outstanding debts and obligations of the businesses, rent payments, and other business expenses.
If you are currently concerned about whether you can keep up with payments on an existing SBA loan, then you may be able to seek help under the Small Business Debt Relief Program. This program is in place to provide immediate relief to those small businesses that already have non-disaster SBA loans. Pursuant to this program, the SBA will cover loan payments for six months. The coverage applies to not only the loan balance, but the principal, interest, and fees associated with the loan. This program will also be available to those new borrowers who take out non-disaster SBA loans within the next six months following the President signing the bill into law.
Texas Business Law Attorney
These are times of much uncertainty for everyone. This is very true for small businesses who do not know when their doors will be reopened and when the economy will start building back again. The Kumar Law Firm is here to do whatever we can to help small businesses during these difficult days. We can help you navigate the new programs under the CARES Act and are here to answer your questions. Contact us today.