• Christina Schenk-Hargrove

CARES Act for Small Business and Entrepreneurs

On Friday, March 27, 2020, the federal government passed the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act)(click here). The U.S. Senate Committee on Small Business & Entrepreneurship (click here) has published a short guide to the programs and initiatives that were included in the CARES Act that were intended to assist business owners. The highlights include an emergency loan that can be forgiven if used to retain (or rehire) employees, expanded Economic Injury Disaster Loans (EIDLs), and Emergency Grants up to $10,000. Check out the Business Owner's Guide for more detail. Here is an overview:


Paycheck Protection Program - intended to provide capital to cover the cost of retaining employees. These are government backed loans modeled after the existing SBA 7(a) loan program. PPP loans will be available through the SBA and other banks, credit unions and lenders that already provide 7(a) loans. These loans can be forgiven as long as employers continue paying employees during the eight weeks following the origination of the loan, then the amount they spent on payroll costs, mortgage interest, rent payments and utility payments can be combined and that portion of the loan will be forgiven. This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls.


Changes to the SBA's Economic Injury Disaster Loans (EIDLs) and Emergency Economic Injury Grants - the CARES Act expands eligibility for EIDLs and provides an emergency advance of up to $10,000 for small businesses harmed by COVID-19. The advance does not need to be repaid under any circumstance and can be used to keep employees on payroll, pay for sick leave, or pay business debts, rent and mortgage payments. You must apply for an EIDL and then request the advance. Sole proprietors with or without employees and independent contractors are eligible for an EIDL.


Other - Small Business Debt Relief Program (if you already have a non-disaster SBA loan or take one out now, the SBA will cover all loan payments on these loans for six months); counseling and training through local Small Business Development Centers, Women's Business Centers, or SCORE mentorship chapters; payroll tax credits and deferments.


Applications for an EIDL are online at the SBA (click here). You apply for this in order to request the Grant. Banks and credit unions will need some time to catch up to provide the PPP loan and Debt Relief program.


I will address unemployment in a separate article.


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Christina Schenk-Hargrove, Esq.

Email: chargrove@cshlawllc.com
Call or Text: 978-810-4237

Material presented on the Christina Schenk-Hargrove website is intended for information purposes only. It is not intended as professional advice and should not be construed as such. 

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