Coronavirus Aid, Relief, and Economic Security (CARES) Act
The programs and initiatives in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was just passed by Congress are intended to assist business owners with whatever needs they have right now. When implemented, there will be many new resources available for small businesses, as well as certain nonprofits and other employers. This guide provides information about the major programs and initiatives that will soon be available from the Small Business Administration (SBA) to address these needs, as well as some additional tax provisions that are outside the scope of SBA.
- Link to the Small Business Owner’s Guide to the CARES Act here.
Small Business Administration (SBA)
Lapse in Appropriations Notice: SBA is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.
EIDL applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis.
To learn more about the relief options available for your business, click here.
There are three SBA emergency capital programs available to the public:
- A Low interest, long term “Economic Injury Disaster Loan” for up to $2 million. The first payment is deferred for 12 months. The application can be completed online at www.sba.gov/DISASTER
- If you apply for that Disaster Loan – you can ask for an “Economic Injury Disaster Loan Advance” for up to $10,000 as part of the loan application. If approved, these funds can be used for payroll and other operating expenses and can be FORGIVEN.
- The SBA and Treasury Department launched the Paycheck Protection Program to help keep employees on payroll and small businesses operating. Speak with an SBA lender about this program, a lender list can be found on the SBA website at: www.sba.gov/MA
- If you have an existing relationship with an SBA Express lender, the Express Bridge Loan might be a good fit to get up to $25K quickly. Look for Express Lenders
- To learn about keeping up with payments on your current or potential SBA loan link to Small Business Debt Relief Program.
Frequently Asked Questions
If I am applying or already received an Economic Injury Disaster Loan, is my small business eligible to participate in the Paycheck Protection Program?
- Borrowers can apply for BOTH an Economic Injury Disaster Loan and the Paycheck Protection Program loan.
- However, the Paycheck Protection Program loan funds and the Economic Injury Disaster Loan funds cannot be used for the same purpose.
- The Paycheck Protection Program loan must be used for payroll (minimum of 75% of the funds received) for it to be eligible for a forgivable loan and the remaining 25% is used for different purposes (mortgage interest, rent, utilities, other services).
- Borrowers who accept both loan funds should document the uses of the funds appropriately.
- If your Economic Injury Disaster Loan was used for payroll costs, your Paycheck Protection Program loan must be used to refinance your Economic Injury Disaster Loan.
- Any advance up to $10,000 on the Economic Injury Disaster Loan will be deducted from the loan forgiveness amount of the Paycheck Protection Program loan.
- For example, a borrower may obtain a loan from the Paycheck Protection Program and use those funds to pay for 8 weeks of payroll or employee retention. They may wish to then dedicate their entire EIDL funds towards working capital, notes payable and accounts payable that do not duplicate the funds provided through the Paycheck Protection Program. If the EIDL loan was used for payroll expenses, the borrower must refinance the EIDL loan with the PPP loan which carries a lower interest rate as well as a shorter maturity period.
- If you are applying for both, you can accept PPP first – then decide whether or not to close on your EIDL approved loan.
- The application period for PPP loans runs through June 30, 2020, but the EIDL application period runs through December 2020.
- EIDL Loan advances will start to be distributed this week. $1000 per employee up to $10,000 max
- EIDL Loans – IF YOU DID NOT APPLY THROUGH THE STREAMLINED PROCESS WHICH STARTED LAST WEEK, SBA request that you visit https://covid19relief.sba.gov/#/ and reapply with the secure streamlined process. You will not lose your place in queue with your original EIDL loan application.
- EIDL loans will not require a personal guarantee for loans under $200,000
- EIDL loans will not require real estate collateral for loans under $500,000. SBA will be looking be best available lien priority on all business assets or other business assets.
Paycheck Protection Program Loans Frequently Asked Questions
SBA Additional Resources:
- Joint Statement by Secretary Steven T. Mnuchin and Administrator Jovita Carranza on the Review Procedure for Paycheck Protection Program Loans (5/5//2020)
- Resumption of the Paycheck Protection Program Begins Monday, April 27, 2020 (4/27/2020)
- SBA Clarifies Eligibility of Faith-Based Organizations
- “Interim Final Rule – Additional Eligibility Criteria and Requirements for Certain Pledges of Loans Applicable Affiliation Rules”
- DUE MAY 15: Comments on Paycheck Protection Program Interim Final Rules – On April 15, 2020, the U.S. Small Business Administration (SBA) published an interim final rule for the implementation of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act or the Act). The CARES Act temporarily adds a new product, titled the “Paycheck Protection Program,” to SBA’s 7(a) Loan Program. It provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the Paycheck Protection Program in order to provide economic relief to small businesses nationwide adversely impacted by COVID-19. This INTERIM FINAL RULE outlines formal guidance and requests public comment. Comments are due on May 15, 2020.
- FAQ for Individuals with Self-Employment Income who File a Form 1040, Schedule C: 19-page document
SBA Webinars on Disaster Assistance
The SBA district and regional offices are offering webinars about Economic Injury Disaster Loans that explain this program and how you can apply for disaster assistance. To find out more information Sign up for SBA newsletters using your zip code to get updates
Virtual Mentoring and Training
Offices around the country may be closed to the Coronavirus pandemic, but SCORE, Small Business Development Centers, Women’s Business Centers, and Veterans Business Outreach Centers and other resource partners are providing free business mentoring and training by phone, email, and video. Find an SBA resource partner near you
Office of the Inspector General
Beware of Scams and Fraud Schemes
The Office of Inspector General recognizes that we are facing unprecedented times and is alerting the public about potential fraud schemes related to economic stimulus programs offered by the U.S. Small Business Administration in response to the Novel Coronavirus Pandemic (COVID-19). The Coronavirus Aid, Relief, and Economic Security (CARES) Act, the largest financial assistance bill to date, includes provisions to help small businesses. Fraudsters have already begun targeting small business owners during these economically difficult times. Be on the lookout for grant fraud, loan fraud, and phishing. Learn more
Federal Coronavirus Resources
State, local, and federal agencies are working together to maintain the safety, security, and health of the American people. Check out coronavirus.gov for updates from the White House’s Coronavirus (COVID-19) Task Force. Go to cdc.gov for detailed information about COVID-19 from the Centers for Disease Control and Prevention.
Other Federal Resources:
- Federal Reserve Main Street Lending Program (5/5/2020)
- Occupational Safety and Health Act (OSHA): New Guidance on Preparing Workplaces for COVID-19
- World Health Organization (WHO)
- Department of Homeland Security – Ready
- National Institutes for Health (NIH)
- Government Response to the Coronavirus (COVID-19) Disasters & Emergencies
- S. Chamber of Commerce
- The Save Small Business Fund is a grantmaking initiative offering short-term relief for small employers in the United States and its territories. Funded by corporate and philanthropic partners, the Save Small Business Fund is a collective effort to provide $5,000 grants to as many small employers as we can. The Save Small Business Fund is a grantmaking initiative offering short-term relief for small employers in the United States and its territories. Funded by corporate and philanthropic partners, the Save Small Business Fund is a collective effort to provide $5,000 grants to as many small employers as we can. To learn more click here.