There are numerous relief funding provisions for small and midsized businesses in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. To help business leaders focus their energies, we’ve created this practical, topline summary of the most commonly applicable items.
There are three main loan and credit provisions that most businesses may benefit from:
These programs are administered by the Department of the Treasury, in conjunction with the U.S. Small Business Administration (SBA) and most consumer banks. We anticipate that more clarity on the application and qualification process will be available by Friday, April 3. We are recommending that our clients spend time preparing their loan packages until then. (See our checklist for loan packages.)
These three new relief provisions do not replace the SBA Economic Injury Disaster Loans (EIDLs), but the CARES Act makes the EIDL process friendlier.
Note: We have separately addressed provisions for the deferral of employer Social Security tax and will not address it here. Also, this article covers the CARES Act, not the Families First Coronavirus Response Act (FFCRA), aka H.R. 6201, which provides mandatory leave provisions.
To qualify for the $350 billion PPP, the employer must have fewer than 500 workers. See our guidance on calculating headcount, as this is more complex in some situations.
The intent is to help businesses keep people on payroll and off unemployment. This is a loan with an element of forgiveness when conditions are met. There is clear encouragement to rehire laid off or furloughed workers.
Common obstacles to borrowing are eliminated:
Amount you can borrow:
What can be forgiven:
Note: You will need to provide documentation, so plan to track uses of the funds!
This is intended to provide relief to businesses that were forced to completely or partially shut down (for example, bars and restaurants) or businesses that can show their revenue dropped by at least 50% in the comparable prior-year quarterly period.
What are qualifying wages?
This is a loan program the Treasury Secretary is ordered to create to benefit mid-sized businesses. The first loans are designated for airlines, air cargo companies and businesses that are important to national security. The remaining $450 billion is for businesses with 500 to 10,000 employees that have not gotten adequate help from other provisions of the CARES Act.
Have questions or need some help? Don’t hesitate to reach out to our experts. For the latest regulatory updates and other information on running your organization during disruption, visit our COVID-19 Resource Center.
March 31, 2020