If you already own a small company, you’ve probably heard that the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was just passed, would provide financial aid to smaller companies through a variety of initiatives. Some aspects of the CARES Act have attracted a lot of attention in the media, but do you know about all of the various efforts that the Act includes that can help small businesses?
What is the CARES Act, and why should you care about it? –William D King
On Friday, 27thMarch, 2020, the then President Donald Trump signed the Coronavirus Aid, Relief, along with the Economic Security Act, also referred to as the CARES Act. The CARES Act aims to provide economic compensation in the wake of COVID-19’s unexpected financial and social consequences.
Because so much of American life has indeed been put on pause in all sectors—most notably the entertainment, travel, including hotel industries—the act was viewed as a coordinated agreement to provide much-needed emergency assistance. “This isn’t even a stimulus package,” says Senate Majority Leader Mitch McConnell of the CARES Act. This is a situation that requires immediate attention. Help is needed now.
The Paycheck Protection Program of the Small Business Administration (SBA) is a program that (PPP) that aims to provide small businesses with payroll help as promptly as possible. Businesses that meet the requirements can apply for a loan of up to $2 million, which is roughly 2.5 times their monthly salary. The loan has a fixed interest rate of 1% and no hidden costs, such as origination or prepayment penalties. Obligations on your PPP loan are delayed until you apply for forgiveness and the SBA approves your forgiveness amount; however, interest will still accumulate during this time. If you don’t request loan forgiveness, your payment deferment period may be longer.
Borrowers who spend a great deal of their loan on the payroll, as well as other approved expenses, may be eligible for debt forgiveness.
Payments of stimuli
The provision of direct payments is another important way in which the federal government is attempting to assist individuals and small companies. Individuals having a total income of less than $75,000 per year or couples filing jointly with an adjusted gross income of less than $150,000 per year received payments of $1,200 and $600 in 2020. Congress authorized a payout of $1,4000 with similar income limits in 2021. Whereas these payments are intended to assist a broad range of Americans, they may also benefit entrepreneurs who meet certain criteria.
Disaster Loans for Economic Injury?
William D King says that the US Small Business Administration (SBA) offers Economic Injury Disaster Loans (EIDLs) to help businesses recover from financial damages caused by regional or national disasters. The SBA is providing low-interest finance in the form of EIDLs to small firms under COVID-19.
The CARES Act increased the availability of SBA disaster loans and EIDLs, most often in the form of wage grants. Businesses, on the other hand, may be eligible for an EIDL, an emergency financial injury grant, and a PPP loan; therefore, it’s worth signing up for all three.