CARES Act - Relief for Small Businesses

CARES ACT

Relief for Small Businesses

Because commercial pavement sweeping operators may be considered essential workers in most states, your power sweeping company is probably less likely to be required to shut down than other types of businesses in your local area. Still, many small pavement sweeping business owners may be concerned about the COVID-19 virus’s potential impacts on your long-term cash flow and growth from new customer acquisitions. Fortunately, there is economic help available through the federal CARES Act that can help you keep your employees on your payroll through federal grants and loans that can be forgiven, for businesses that qualify.

What is the CARES Act? Congress has just passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), to assist the business owner’s necessary aid to help them keep people employed and lessen the financial impact of the virus and its consequences to the national economy. As the CARES Act programs are rolled out by the SBA, numerous new resources will become available to small business owners.

For detailed information about the CARES Act benefits for your business, see The Small Business Owner’s Guide to the CARES Act, published by the US Senate Committee on Small Business & Entrepreneurship. The 11-page guide lays out a good comprehensive overview of the provisions of each of the financial relief programs that the Small Business Administration (SBA) will soon make available to help business owners overcome the economic effects of the national COVID-19 emergency. What Kinds of Help for Small Businesses Does the CARES Act Provide? The CARES Act programs may provide your business with financial aid in the form of income replacement during and after the COVID-19 crisis. (Additional help from tax savings through the IRS may also be available to you.) Contact your local SBA District Office for updates on when the CARES Act program funds will become available. Here are some of the key CARES Act programs that the SBA will administrate:

Emergency Economic Injury Grant The grant provides small businesses affected by COVID-19 with a small emergency cash infusion of up to $10,000. The grant is issued within three days from the time of application for an SBA Economic Injury Disaster Loan (EIDL). You must apply for an EIDL first, to then request the advance grant.

The grant does not need to be repaid, regardless of future circumstances. The grant funds can be used for any needs of the business, such as keeping workers on your payroll, covering increased operational costs resulting from disruptions to your supply chain, paying for employees’ sick leave, paying mortgage payments and other debts, paying rent, and meeting other business obligations.

EIDL funds can be used... to cover expenses that the borrower could have paid if the

COVID-19 emergency conditions had not interfered.

Economic Injury Disaster Loans An EIDL loan and other forms of financial relief are available through the CARES Act emergency economic relief program options administrated by the SBA. EIDLs are business loans up to $2 million. The interest rate on EIDLs is 3.75%. The start of payments can be deferred for up to 6 months, and the repayment term can be as long as 30 years.

EIDL funds can be used, per the loan administrator’s discretion, to cover expenses that the borrower could have paid if the COVID-19 emergency conditions had not interfered. Operating costs, including payroll, can be paid with EIDL proceeds. Businesses with 500 or fewer workers are eligible to apply for an EIDL.

The SBA’s lending resource partners will guide you through the process of applying for an EIDL. Contact your local Small Business Development Center (SBDC), SCORE chapter, or Women’s Business Center for help in applying for an EIDL. The Paycheck Protection Program The federal Paycheck Protection Program loan (PPP loan) is the product of a major congressional initiative intended to help workers remain employed and help the national economy recover more quickly after the period of the Corona Virus is over. If you need capital to retain employees on your payroll due to the COVID-19 national emergency, you can receive a PPP loan, which is guaranteed by the federal government for 100% of the loan amount. For employers who maintain their payroll during the period of the Corona Virus crisis, the PPP loan can be forgiven without repayment. Which Businesses are Eligible for the PPP loan, and What Does it Cover? Businesses that were operating by February 15, 2020, are eligible to apply for the PPP loan under the federal CARES Act. The loan can be made retroactive back to that date, to help companies bring back workers they may have already laid off due to the COVID-19 virus emergency. Applications for PPP loans must be submitted on or before June 30, 2020. For answers to frequently asked questions about PPP lending criteria, see The Small Business Owner’s Guide to the CARES Act (page 2). The guide provides detailed answers to questions such as:

4 Which types of businesses are eligible for CARE Act relief? 4 Which payroll costs are eligible for coverage by the PPP loan, and which are not? 4 What are the PPP interest rates and fees, loan repayment terms? 4 How does a lender determine the loan size for which I’m eligible? 4 How is the PPP loan arranged to work along with regular

SBA loans? 4 How is the PPP loan set up to work along with other

CARES Act emergency loans and grants? 4 Where can I find information on tax provisions for economically impacted small businesses?

What are the Repayment Terms for CARE Act PPP Loans The SBA allows loan repayment over a maximum of 10 years. The maximum interest rate charged on a PPP loan is 4%. Loan principal and interest can be deferred for 6 to 12 months following disbursement of loan proceeds. Businesses are limited to one PPP loan. NOTE: All lenders currently designated as SBA 7(a) lenders are eligible PPP lenders.

How is Eligibility for Forgiveness of the PPP Loan Determined? Many small businesses will qualify for forgiveness of their CARES Act loan. The amount forgiven for an employer who is eligible for forgiveness of a PPP loan is equal to the business’s total payroll costs during the 8-weeks covered by the loan period, in comparison to the previous year or previous time period, based on a calculation of an amount that will maintain workers’ wages. Compensation over $100,000 is not eligible for loan forgiveness. To obtain forgiveness of a PPP loan, you need to apply through your lender. Your loan forgiveness application must include: 4 Documentation of numbers of employees on the business’s payroll and their pay rates, federal and state payroll tax filings as well as unemployment insurance filings. • Verification of payments on mortgages, leases, and utilities covered by the CARES Act funds. • Certification from your company’s authorized representative affirming that all delivered documentation is accurate and that the loan amount to be forgiven was used in compliance with CARES Act guidelines.

Small Business Counseling The SBA’s resource partners provide high-quality counseling free of charge, to help you navigate through the complications of operating during the national emergency period of the COVID-19 pandemic. Small business experts will help you evaluate the various financial assistance options for which you are eligible and provide guidance on those most economically advantageous for your business in the short and long term.

The business counseling resource is the ideal place to start your process of obtaining CARES Act emergency financial assistance for your business through the SBA and to obtain an abundance of other information on small business operations during this unusually financially challenging period for business owners.

SOURCES: https://home.treasury.gov/policy-issues/top-priorities/cares-act/ assistance-for-small-businesses https://www.sba.gov/sites/default/files/articles/EIDL_and_ P3_4.1.2020_FINAL_2pm.pdf https://www.sbc.senate.gov/public/_cache/ files/9/7/97ac840c-28b7-4e49-b872-d30a995d8dae/ F2CF1DD78E6D6C8C8C3BF58C6D1DDB2B.small-business-owners-guide-to-the-cares-act-final-.pdf