Relief for Small Business Owners
The CARES (Coronavirus Aid, Relief and Economic Security) Act passed on Friday, March 27th, providing provisions for individuals and small businesses.
For small businesses, they have two options for relief:
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan with an advance of up to $10,000. The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Within the application, there is a loan advance available which will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. The loan advance amount is up to $10,000 with loan payments deferred for twelve months. Funds can be made available within three days of a successful application, and the loan advance will not have to be repaid.
The Paycheck Protection Program (PPM) is designed for small businesses with payroll costs, and less than 500 employees. 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. The loan amount maximum is 2.5X monthly payroll costs, with maximum salary of $100,000 per employee, with a maturity of 2 years and an interest rate of 1%. Most banks are only allowing existing small business clients to apply.
To learn more, reach out to your Financial Advisor at GRID 202 Partners!