COVID-19 Small Business Assistance
The Coronavrius Aid, Relief, and Economic Security Act (CARES Act) was signed into law on March 27, 2020. As we work our way through the legislation to understand the impact it will have on our clients’ personal financial plans, we’ve also learned about several programs for small businesses that may be relevant to our clients (or their loved ones) whose businesses have been impacted. While business loan programs are outside the scope of our practice, we wanted to provide high-level information so that those who have been impacted might find the appropriate resources and programs.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
The CARES Act expands eligibility for access to Economic Injury Disaster Loans (EIDL), which are low interest loans to pay for expenses that could have been met had the disaster/crisis not occured. Small businesses (500 or fewer employees) along with sole proprietors (with or without employees) and independent contractors are eligible if they were in operation on January 31, 2020 when the public health crisis was announced.
In addition to the expanded eligibility of the EIDL program, the CARES Act also provides Emergency Economic Injury Grants. These grants are an advance of up to $10,000 and are supposed to be paid within three days of applying for an EIDL. Although you must first apply for an EIDL in order to request the grant, the advance does not need to be repaid even if the EIDL is denied 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. As such, for business that have or expect to suffer substantial economic injury as a result of the COVID-19 health crisis, the grant acts as somewhat as a stimulus check to ensure business obligations can continue to be made. Applications can be submitted through the Small Business Administration here.
Paycheck Protection Program Loans
This program incentivizes employers to maintain payroll through the emergency by providing federally-guaranteed loans that can be forgiven, if certain conditions are met. The loan can be up to 2.5x monthly payroll costs and up to eight weeks of payroll costs can be forgiven if payroll and salary levels are maintained. The loan is available until June 30, 2020 and is retroactive back to February 15, 2020 to incentivize employers to re-hire employees who may have already been laid off. Additional details on the program can be found here.