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Small Business Owners Guide to the CARES Act

March 31, 2020
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As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the government has funded a number of initiatives to help small businesses. As you navigate this difficult time, you may want to look into the following programs. 

Paycheck Protection Program

Many businesses have had to furlough their employees, while others have been forced to cut hours. The Paycheck Protection Program (PPP) offers Small Business Administration (SBA) loans to help small businesses continue to pay their employees during this time. You can also use the funds for qualifying mortgage interest, rent, and utility payments. 

These loans can be worth two months of your average payroll costs plus 25%, up to $10 million, and you may be able to get the loan forgiven if you establish that you used the funds to cover eligible costs during the eight weeks after you received the loan. The amount forgiven may be reduced if you reduced your number of full-time employees or cut hours by more than 25%.

To apply, your business must have 500 or fewer employees. Independent contractors can also apply, and they can use the funds to cover their loss of income during this time.  

Economic Injury Disaster Loans and Emergency Economic Injury Grants

If your business or nonprofit is experiencing economic issues due to COVID-19, you can apply for an Economic Injury Disaster Loan. To apply, you must be a business or private nonprofit with 500 or fewer employees or an independent contractor. Worth up to $2 million, these low- interest loans can be used to pay for expenses that your business would have been able to cover if the disaster were not happening. 

When you apply for this loan, you can request an emergency grant, and if approved, you receive an advance of up to $10,000 within three days. These funds are a grant, and you do not have to repay them. 

Small Business Debt Relief Program

The debt relief program provides assistance to businesses with non-disaster SBA loans, including 7(a), 504, and microloans. These loans are all for small businesses, and if you have one, the SBA will cover your payments including the principal, interest, and fees for six months. You can also get this relief if you take out one of these loans within six months after the CARES Act was signed into law. 

Counseling and Training

Running a business is always challenging, but it's substantially harder during times of crisis and uncertainty. To help, the government is providing additional funds to resources such as the Small Business Development Center (SBDC), the Women's Business Center (WBC), and SCORE mentorship chapters. If you want resources or support for your small business, you may want to reach out to one of these organizations. 

Help for Government Contractors

The CARES Act allows agencies to change the terms and conditions of government contracts during this time. Agencies can also reimburse contractors for leave paid to employees or subcontractors who can't work in government facilities during the coronavirus and who can't perform their jobs by telecommuting. 



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