The CARES Act helps small companies fight COVID-19

A $2 trillion monetary help package deal was signed into regulation this previous week in an effort to fight the results of the COVID-19 pandemic on the U.S. economic system. The Coronavirus Assist, Aid and Financial Safety Act (CARES Act) was designed to assist small to mid-sized companies, non-profits and church buildings keep afloat throughout this unprecedented time.

With 3.3 million Individuals already submitting for unemployment and the numbers growing every single day, the CARES Act is positioned to assist corporations preserve their workers and deal with instant cashflow points they’re going through within the midst of the outbreak.

The CARES Act, which is the third piece of legislative reduction, provides a number of options aimed toward serving to small companies, together with:

• A Paycheck Safety Program to cowl the price of retaining workers (and 100% forgivable loans for as much as 8 weeks’ payroll if sure necessities are met)
• An Emergency Financial Harm Grant for fast money
• A Small Enterprise Debt Aid Program to assist small companies sustain with funds on present loans
• Free counseling packages to assist enterprise homeowners navigate unsure occasions
• Expanded flexibility for tax-advantaged advantages instruments like HSAs, HRAs, and FSAs
• Different instruments to assist

Paycheck Safety Program (PPP) and small companies 

A brand new mortgage program was created by the CARES Act known as the Paycheck Safety Program. For companies with 500 or fewer workers, it supplies a principal mortgage quantity of as much as $10 million for as much as 10 years with an rate of interest of not more than 4% each year. Funds will be deferred for at the very least six months and as much as one 12 months, with no pre-payment penalty. 

Focused at serving to workers preserve their jobs, this program incentivizes enterprise homeowners additional by providing 100% mortgage forgiveness of as much as 8 weeks of payroll based mostly on worker retention and wage ranges.

The Treasury simply issued up to date steerage on this measure, which you could find right here. 

The thought course of is that if workers can preserve their jobs, the economic system will bounce again a lot simpler after the disaster. This program helps employers keep away from layoffs. 

Paycheck Safety Program loans can be utilized for the next prices:

• Payroll assist (together with paid sick, medical depart)
• Worker salaries as much as 100k
• Mortgage, lease, utility funds
• Insurance coverage premiums and ICHRA reimbursements (we’re nonetheless researching how they may take care of QSEHRA reimbursements) 
• Different debt obligations

Who: Small companies with lower than 500 workers in a single location, 501(c)(3) and 501(c)(19) nonprofit organizations with lower than 500 workers, sole proprietorships, impartial contractors and eligible self employed people. Affiliation guidelines are waived for any enterprise working as a franchise that’s assigned a franchise identifier code or receives funding by way of a Small Enterprise Funding Firm.  

When: Small companies will have the ability to apply in the event that they had been affected by COVID-19 between February 15 and June 30, 2020. The PPP is retroactive to February 15, 2020, to assist deliver already laid off employees again onto payrolls. 

How a lot: The mortgage quantity varies per enterprise. Whereas $10 million is the restrict, you will discover the quantity for what you are promoting by doing a bit algebra. Here is the system: multiply the typical complete month-to-month funds for payroll prices of what you are promoting throughout the 1-year interval earlier than the mortgage by 2.5. Keep in mind, impartial contractors or 1099s shouldn’t be included in an employer’s mortgage quantity as they will apply individually. Family workers will not be included both.  

It is vital to notice that if a enterprise receives a Paycheck Safety Program mortgage for worker salaries, payroll assist, mortgage funds and/or different debt obligations, it will not be eligible to obtain an Financial Harm Catastrophe Mortgage (EIDL) for a similar goal, or “double dip.” Paycheck Safety loans, nonetheless, could also be used to repay an EIDL mortgage.

Which brings us to our subsequent level. 

Emergency Financial Harm Grants and Financial Harm Catastrophe Loans (EIDL)

For corporations with 500 or fewer workers, these monetary reduction instruments symbolize decrease curiosity loans of as much as $2 million, with principal and curiosity deferment on the Administrator’s discretion, which might be obtainable to pay for bills that might have been met had the catastrophe not occurred, together with payroll and different working bills.

Who: Sole proprietorships (with or with out workers), impartial contractors, cooperatives and worker owned companies, and tribal companies. 

When: January 31, 2020 – December 31, 2020

How: Apple for an EIDL on-line right here.

Vital be aware: Whilst you can apply for each a PPP, Emergency Financial Harm Grants, and Financial Harm Catastrophe Loans on the identical time, you can not use your EIDL for a similar goal as your PPP mortgage. Here is an actual life instance. Should you use funds out of your EIDL to cowl Could payroll, you’ll be able to’t use the PPP to cowl the identical prices. You may, nonetheless, use PPP to cowl payroll for a special month or completely different set of employees. You simply cannot double dip. 

Small Enterprise Debt Aid

This a part of the invoice supplies instant reduction for small companies with non-disaster loans like 7(a), 504, and micro-loans. It covers principal, curiosity, and charges for six months and applies to current loans in addition to new debtors that take out loans inside six months of the President signing the invoice into regulation. It doesn’t apply to PPP loans, as lined above.

You will discover out the way to begin the applying course of by finding a Small Enterprise Growth Heart close to you. 

Free counseling

Need your individual personal enterprise counselor that will help you navigate this bizarre time without spending a dime? Look no additional than your native Small Enterprise Growth Heart, Girls’s Enterprise Heart, SCORE mentorship chapter or Minority Enterprise Growth Company Enterprise Heart. You will discover assist close to you by following this hyperlink.

Expanded flexibility for HSAs, HRAS, and FSAs

Not solely are ICHRA reimbursements eligible for PPPs (as lined above), a number of provisions had been tucked into this invoice that make it simpler to make use of tax-friendly instruments like HSAs, HRAs, and FSAs to cowl on a regular basis prices, like over-the-counter meds and not using a prescription and feminine hygiene merchandise like tampons. Nutritional vitamins and dietary supplements will want a health care provider’s be aware. That is nice because you used to need to have a prescription for these over-the-counter meds.

Different instruments to assist

The CARES Act additionally included the next provisions to assist small enterprise homeowners such as you, lots of which construct upon laws beforehand lined within the Households First Coronavirus Response Act. 

SBA Specific Mortgage: Will increase the max SBA Specific mortgage (a mortgage that is processed rapidly in 36 hours( from $350,000 to $1 million by way of December 31, 2020.

Worker Retention Tax Credit score: Small companies could also be eligible for refundable payroll tax credit score for half of wages paid between March 12, 2020 and January 31, 2021.  The credit score is on the market to employers that meet sure standards, like if enterprise was absolutely or partially suspended due to coronavirus and if gross receipts declined by greater than half when in comparison with the identical time final 12 months. 

Superior Tax Credit for Paid Go away: Permits employers to obtain an advance tax credit score for the Households First requirement of paid sick depart versus having it reimbursed. That is positively an enchancment there. 

Delayed Fee of Employer Payroll Taxes: Employers and the self-employed might defer cost of their employer share of the Social Safety tax they’re chargeable for paying.

Our workforce is right here to assist

We’re a small enterprise similar to you and are grappling with lots of the identical laborious matters and uncertainties you might be proper now. We concentrate on tax-friendly advantages options for our shoppers and are pleased to stroll you thru this new laws and the way it impacts you, as a small enterprise proprietor. Our philosophy is to remain as knowledgeable as potential throughout this time because the scenario continues to develop.

We have put collectively a few assets to assist, together with our weblog on Small Enterprise Well being Insurance coverage and Coronavirus, our tackle how the Households First Act helps small companies,  in addition to our Coronavirus roadmap for small enterprise homeowners.

Different assets that many small enterprise homeowners are discovering useful as they reevaluate their profit prices are our new Small Enterprise Well being Insurance coverage Information and our CEO’s visitor publish in Worker Advantages Advisor on how our shoppers are utilizing HRAs to take care of advantages and keep afloat throughout COVID-19.

Chat with us any time on-line.

Learn the entire CARES Act right here.