The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. A significant amount of relief has been designated for small businesses. Changes are anticipated and further guidance is expected to follow.
The following are highlights of the Small Business provisions of the bill.
Paycheck Protection Program (PPP)
This program aims to cover payroll and other expenses for a limited period of time. Small businesses may take out loans, limited to a formula tied to payroll costs. Loans may be forgiven if the firm uses the loan for payroll, interest payments on mortgages, rent, and utilities and would be reduced proportionally by any reduction in employees retained compared to the prior year.
Small Business Debt Relief Program
This program looks to provide immediate relief to small businesses with non-disaster Small Business Administration (SBA) loans, in particular 7(a), 504, and micro loans. Under this program, the SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law.
Economic Injury Disaster Loans & Emergency Economic Injury Grants
These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
The following is a link to The Small Business Owner’s Guide to the CARES Act which provides an overview of the programs. Additional information may become available.
SBA website outlining Coronavirus Relief Options:
SBA Sacramento District Office serves the North State, and additional information can be found on their website: https://www.sba.gov/offices/district/ca/citrus-heights
SBA San Francisco District Office website:
Feel free to contact us if you have any questions.
Miste & Steve
Steven Cliadakis, MBA, CFP®, AIF®
Miste Cliadakis, CWS®, AIF®