The CARES Act and What It Means to Small Businesses
The CARES Act is a $2 Trillion dollar federal bill designed to sustain the economy, people and business (including small businesses) during the Coronavirus/COVID 19 outbreak. The bill provides direct cash payments, expansion of unemployment coverage, expansion of health care, student loan relief and specific programs for small businesses. The small business help has two main provisions:
- Emergency Loans
- Employee retention Tax Credits
Also known as the paycheck protection program. The US Chamber of Commerce has a detailed guide along with the SBA. where you can also apply for the loans. At a high level, these loans are designed to support SMB’s (fewer than 500 employees), non-profits, independent contractors, sole proprietors co-ops, etc. There are 5 different avenues to secure your financial status.
- Paycheck Protection Program – This loan program is designed to support businesses and encourage them to continue to employ their staff. Lenders can start processing applications on April 3rd. The loans will be forgiven if “All employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities. You can apply through SBA 7(a) lenders or a federally insured institution, you should consult with your local lender if they are participating. These loans will be fully forgiven if it is used for payroll costs, interest on mortgages, rent, and utilities. At least 75% of the funds forgiven have to be used on payroll.
- Employees making in excess of $100k per year are excluded.
- Seasonal business can use average monthly payroll for the time period between February 15, 2019 and June 30, 2019.
- Business can apply until June 30, 2020
- Loans are retroactive to February 15, 2020.
- The loan has a maturity of 2 years and an interest rate of 1%
- The max loan size is 250% of your average monthly expense in 2019 excluding those employees that exceed $100,000 per year.
- Emergency Grants of $10k – This loan is part of the Economic Injury Disaster Loans (EIDL) and provides a $10,000 advance of the above loan program up until Dec, 31, 2020. You can apply for the loan here. You must first apply for the EIDL program then request the advance.
- SBA Express Bridge Loans – SMB’s who have an existing business relationship with an SBA Express Lender up to $25,000
- SBA Debt Relief – The SBA will automatically pay the principal, interest, and fees of 7(a), 504 and micro loans for 6 months, in addition, it will automatically pay for loans issued prior to September 27, 2020.
Employers subject to hardships are eligible for a payroll tax credit of 50% of wages paid to eligible employees on the first $10,000 of compensation including the employer portion of healthcare benefits. This credit is not available to businesses that are receiving assistance via the paycheck protection program (Item 1 above). Employers are also able to defer payroll taxes through the end of 2020. Amounts will be due in equal payments in 2021 and 2022. The US Chamber has a great resource here.
Note: Gather your 2017, 2018 and 2019 tax documents along with EIN or TIN numbers. You will also need information that documents payroll such as a W3, payroll costs, business expenses related to rent, mortgages and utilities.
States, cities, and counties are also rolling out aid to businesses as always check with your local state website or local area chamber of commerce for more information.
Alabama – Waiving late fees on Sales Tax through June 1, 2020 for small retail businesses for businesses that average less than $62,500 or less per year AND hospitality businesses. It is also waiving late fees for lodging taxes.
Alaska – Please check with your local resources
Arizona – Please check with your local resources
Arkansas – Is offering bridge loans to cover expenses
California – The state is offering loans to small businesses & non-profits with less than 750 employees. It is also offering interest free deferrals of sales/use tax up to $50,000 for businesses with less than $5 million in taxable sales. San Francisco, Los Angeles, South Country, and Sacramento Country are also offering additional programs.
Colorado – The city of Denver is working on a process for grants and micro loans.
Connecticut – Connecticut is offering bridge loans to organizations with 100 or fewer employees up to $75,000.
Delaware – Hospitality Emergency Loan Program no-interest loans up to $10,000.
Florida – Has bridge loans to provide short term interest-free loans.
Georgia – Please check with your local resources
Hawaii – Please check with your local resources
Idaho – Please check with your local resources
Illinois – The City of Chicago is offering five-year loans of up to $50,000 as part of the Chicago Small Business Resiliency Fund
Indiana – Please check with your local resources
Iowa – Is offering a tax deferral. It also has a separate program of sole operator businesses.
Kansas – Hospitality Relief Emergency Fund, has exhausted its funding but look here for any potential updates.
Kentucky – Income tax relief in the form of delays on filings.
Louisiana – New Orleans has a program for $500- $1000 for gig works
Maine – Programs to offer loans, bridge loans and backing for businesses impacted, providing funds of $50,000 to $100,000.
Maryland – Loans with no principal payments due in the first 12 months, then converts to 2% for the balance 36 months. Grants of up to $10,000 and an incentive program for manufacturers who make critical PPE.
Massachusetts – Funds of up to $75,000 for business with fewer than 50 employees both full time and part-time. The funds have been exhausted but check the link for any updates. It is also now allowing alcohol to be sold for “take out” by restaurants.
Michigan – Grants for PPE and impacted businesses. It is also offering loans of up to $10,000 for small businesses.
Minnesota – DEED program to offer loans of $2,500 to $35,000. The loans are interest-free over five years, the first payment will be deferred for six months.
Missouri – Please check with your local resources
Mississippi – Please check with your local resources
Montana – Please check with your local resources
Nebraska – Please check with your local resources
Nevada – A public Private COVID 19 relief fund has been established.
New Hampshire – A relief fund has been established for health care organizations and restaurants can now sell take out alcohol.
New Jersey – A variety of loans and grants are available. Loans through the CDFI program will open for applications on April 8, 2020. Each loan cannot exceed $75,000
New Mexico – The New Mexico Economic Development Department is assisting businesses seeking loads.
New York – New York City is offered a grant program that is now stopped. Check HERE for updates. It also has a continuity loan program, details can be found on their website.
North Carolina – Please check with your local resources
North Dakota – Stopped loan payments for the development program for 30 days
Ohio – The Ohio Department of Commerce is buying back liquor from bars and restaurants
Oklahoma – Please check with your local resources
Oregon – The cities of Beaverton, Hillsboro and Portland have emergency business assistance programs.
Pennsylvania – Providing loans of up to $100,000 or less to for-profit businesses with 100 or fewer full-time employees.
Rhode Island – Loans are being offered for Providence based businesses.
South Carolina – Extending the income tax filing date.
South Dakota – Business with less than 250 employees have access to loans from $5,000 to $75,000 with a 0% interest rate and no payments due the first 6 months.
Tennessee – Please check with your local resources
Texas – Please check with your local resources
Utah – Please check with your local resources
Vermont – Please check with your local resources
Virginia – Income tax payment extension, please check their website for updates
Washington – Suspension of late fees for tax payments. Along with a SharedWork program to reduce employee hours and allow them to collect partial unemployment benefits.
West Virginia – Please check with your local resources
Wisconsin – Grants up to $20,000 through the community development financial institutions
Wyoming – Jackson Hole has created an emergency fund.
We encourage you to check this blog regularly for more information as it becomes available.
Disclaimer: Homestead is not responsible for broken links, all content on linked webpages is the responsibility of the owner and Homestead does not make any claims as to its accuracy. Please note the information provided here is not meant to be financial advice. We recommend contacting your financial institution or financial advisor for professional assistance.