With the COVID-19 Virus spreading, and Stay at Home Orders in place in Illinois and most other states, Small Businesses are reeling. On March 27, 2020, the President signed the Coronavirus Aid and Economic Security Act, or CARES Act. This Act is here to help Small Business Owners keep things going during this crisis, and beyond. To make this aid accessible, they expanded the definition of a Business Owner who can get relief. You don’t have to be a corporation, you can run a business as a d/b/a too, and still get relief. There are 2 new programs from the US Small Business Administration: The Economic Injury Disaster Relief Loan Program (EIDL) and the Payroll Protection Program (PPP).
The Economic Injury Disaster Relief Loan- Money Advanced Now!
The EIDL allows a qualifying business to apply for a loan directly with the SBA, AND get a $10,000.00 ADVANCE on the loan. That advance is a grant, and the Business Owner won’t ever have to pay it back. You can later apply for more money, but even if you don’t get a loan later, you won’t have to pay it back! It is an easy application, and your business needs to have existed before 2/15/2020, and have a Tax ID Number. You’ll need to have the last 12 months of gross revenue figure available, along with your personal information. And, they promise to get you that advance ASAP (within days!), so you can continue to pay rent, order supplies, and pay utilities. This program ends 12/31/2020, but the funds are limited so apply quickly!
The Payroll Protection Plan- Money For Payroll and Other Business Expenses!
The Second program is the PPP. This allows a Small Business (under 500 employees, so mom & pop businesses qualify!) to keep paying its employees, or hire them back. The amount a business owner can borrow depends on a formula based on its payroll. And, if you keep the same number of employees by June 1, 2020, you can get all or part of the loan forgiven! Yes, if you keep people employed, you can get loan forgiveness! These loans are made through SBA approved banks, so you will have to apply that way. The verification process is still being worked out. And, you do have to keep detailed records of all of the ways you spend that loan money. But, this is a great way to help small businesses such as restaurants survive in this difficult time. Even if you do not get all of the loan money forgiven, the rates are no more than 4% interest.
Here is the Guide put out by the US Senate Committee
These are great lifelines for Small Businesses, the lifeblood of the US Economy. We help small business owners survive in all times, especially now. These are just some of the many new programs quickly set up by the US Government. More updates to follow!
If you have questions or need more information on how to keep going, or what to do from here, call us, we can help.
Daniel J Winter