We have put together a quick summary of resources available to small businesses amid the coronavirus (COVID-19) pandemic and hope that you will find it useful. This memo will guide you through the primary relief options available to small businesses through the Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, 2020.
What types of help are available for your small business under the CARES Act?
The CARES Act encompasses several different programs. The primary programs are:
• Payroll Protection Program (PPP) Loans. These loans are designed to help keep employees on the payroll and provide cash-flow assistance to small businesses over the short term;
• The Small Business Debt Relief Program. This is meant to help small businesses stay afloat and cover expenses such as rent, utilities, and loan payments for a few weeks; and
• The Emergency Economic Injury Grant – This provides small businesses with a small emergency advance in order to continue operations. It does not have to be repaid.
Some of the loans made available under the CARES Act can be forgiven and will not have to be repaid, however, this is primarily contingent on keeping employees on the payroll.
If you apply for a PPP Loan, you will not be able to claim an employee retention credit under the CARES Act.
Where can you get information on these programs (eligibility, amount, terms, how to apply, etc.)?
The U.S. Senate Committee on Small Business & Entrepreneurship has put together a Frequently Asked Questions (FAQ) document that answers most questions and is easy to read:
The Small Business Owner’s Guide to the CARES Act.
Editor’s Note: The document referenced above was issued at the beginning of the crisis and the Treasury Department set up slightly different terms for the TPP Loans (a 2-year term and an interest rate of 1%).
What should you do now?
Consider applying for these resources now. The demand is expected to be overwhelming. The application for the Payroll Protection Program opened on Friday, April 3rd. The Treasury Department has already issued information for lenders and borrowers. The application form is available here: https://www.sba.gov/document/sba-form–paycheck-protection-program-borrower-application-form. Note—the Payroll Protection Program has a cap.
It is also a good idea to talk to your bank at your earliest convenience. Some of these loans will be issued by banks and initiating discussions with your lender early may make a difference in how quickly you have access to funds.
If your business was partially or fully suspended due to COVID-19, now is also the time to decide whether it is more advantageous for you to claim an employee retention credit under the CARES ACT (50% of eligible wages up to $10,000 per employee) or to apply for a PPP Loan.
What about the Individual Recovery Rebate Payments?
Assuming you filed a 2018 or 2019 return, the individual recovery rebate payments should be paid out to eligible individuals in the next few weeks without taxpayer action required, if the IRS has your direct deposit information. In some cases (for instance, if your income decreased), it may be beneficial to file your 2019 tax return immediately even if you now have until July 15, 2020 to file it.
What else may be available?
States, cities, and even private organizations are coming up with their own small business assistance programs, so we recommend you check these resources as soon as possible as well.
We would be happy to meet with you to go through this memo. Please call us with any questions you may have.