The Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed by Congress just last week provides several programs intended to assist business owners with their immediate financial and operational needs. As with a lot of things right now, these programs are being developed on the fly and will take some time to implement, but the CARES Act will provide several new resources for small businesses and some nonprofits.

The purpose of this summary is to arm small businesses with some basic and essential information about the major CARES Act programs that will be available through the Small Business Administration (SBA) as well as a few other topics that relate to the string of recent businesses, employment, and economic stimulus related legislation that has been enacted recently. This guide provides information about the major programs and initiatives that will soon be available from the Small Business Administration (SBA) to address these needs, as well as some additional tax provisions that are outside the scope of SBA.

To keep up to date on when these programs become available, please stay in contact with your local Small Business Administration (SBA) District Office, which you can locate HERE.

 

 

Quick Links

 

 

If you know what you’re looking for, use the links below skip to a dedicated page with the relevant information you are looking for. If you’re not sure what your looking for, this page contains our entire CARES Act cheat sheet from start to finish.

Do you need:

• Capital to cover your payroll and allow you to retain employees?

The Paycheck Protection Program could be a suitable option.

• Need immediate access to a small amount of cash to keep your doors open?

The Emergency Economic Injury Grant would be a good starting place.

• Have an existing SBA loan and you’re worried about being able to make those payments?

Start with the Small Business Debt Relief Program.

Our full CARES ACT cheat sheet starts here.

Paycheck Protection Program

The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy to snap-back quicker after the crisis. PPP has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees and at least six months of deferral with maximum deferrals of up to a year. Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program is retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020.

PPP FAQ’s

QUESTION: What types of businesses are eligible for a PPP loan?

Answer:

• Businesses and entities must have been in operation on or before February 15, 2020.
  
• Small businesses (500 or fewer employees, with some exceptions to larger)
  
• 501(c)(3) nonprofit organizations
• 501(c)(19) veterans organization
• Tribal businesses described in section 31(b)(2)(C) that have fewer than 500 employees or fewer employees than established by the relevant industry code.
  
• Individuals who operate as sole proprietors, independent contractors, and eligible self-employed individuals.
  
• Any business that employs not more than 500 employees per physical location of the business and that is assigned a North American Industry Classification System code beginning with 72, for which the affiliation rules are waived.
  
• Affiliation rules are also waived for any businesses operating as a franchise that is assigned a franchise identifier code by the Administration, and companies that received funding through a Small Business Investment Company.
  

 

QUESTION: What are affiliation rules?

Answer:

Affiliation rules are used by the SBA in deciding whether a business’s affiliations (think related businesses) preclude them from being considered “small.” The SBA, in most circumstances, considers affiliation to exists when one business controls or has the power to control another or when a third party (or parties) controls or has the power to control both businesses. For more information about the SBA’s rules on “Affiliation” please see this link.

 

QUESTION: What types of non-profits are eligible?

Answer:

• With a few notable exceptions, most 501(c)(3) non-profits with 500 employees or fewer will be eligible. To see if your non-profit qualifies, check the link below, you will need the 6-digit North American Industry Classification Code for your business.
   

 

Link:

 

https://www.sba.gov/size-standards/

 

 

QUESTION: How is the loan size determined?

Answer: The maximum loan size is always $10 million. The exact calculation for your eligible loan size will depend on the following:

• If your business was operational between February 15, 2019 – June 30, 2019, your maximum loan amount will be equal to 250 percent (250%) of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can elect to choose March 1, 2019 as your period start date.
  
• If your business was not operational between February 15, 2019 – June 30, 2019, then your maximum loan amount is equal to 250 percent (250%) of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
  
• If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you may add the outstanding loan amount to the payroll sum.
  

 

QUESTION: What costs are eligible for payroll?

Answer:

• Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
  
• Payments for sick leave, vacation, parental, family, or medical
  
• Allowance for dismissal or separation
  
• Payments required for group health care benefits, including insurance premiums
  
• Payments for most retirement benefits
  
• Payments for State or local tax assessed on the compensation of employees
  

 

QUESTION: What costs are not eligible for payroll?

Answer:

• Employee/owner compensation over $100,000
• Compensation for employees whose principal place of residence is located outside of the U.S.
• Taxes imposed or withheld under chapters 21, 22, and 24 of the IRS code
• Sick pay and family leave for which a credit is already provided for under the linked Families First Coronavirus Response Act (see sections 7001 and 7003)

QUESTION: What are allowable uses of loan proceeds?

Answer:

• Payroll costs as described in the “What costs are eligible for payroll” section above.
  
• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
• Employee salaries, commissions, or similar compensations with the noted exclusions in the “What costs are not eligible for payroll” section directly above.
  
• Payments of interest on any mortgage obligation (NOTE: the prepayment of or payment of principal on a mortgage obligation is expressly excluded)
  
• Rent (including rent under a lease agreement)
• Utilities
• Interest on any other debt obligations that were incurred before the covered period 

  
  

QUESTION: What are the loan terms, interest rate, and associated fees?

Answer:

• Maximum term for PPP loans: 10 years
• Maximum interest rate: 4%
  
• Loan Fees: Zero
  
• Prepayment Fee: Zero
  
• Application Fees: The SBA will establish application fees caps for lenders that charge
  

 

QUESTION: How is the forgiveness amount calculated?

Answer: Forgiveness on a covered loan is equal to the sum of the following payroll costs incurred during the covered 8 week period compared to the previous year or time period, proportionate to maintaining employees and wages (excluding compensation over $100,000):

• Payroll costs + any payment of interest on any covered mortgage obligation (excluding any prepayment or payment of principal on a covered mortgage obligation) + any payment on any covered rent obligation + any covered utility payment.
  

 

QUESTION: How do I get forgiveness on my PPP loan?

Answer: In order for any forgiveness to apply to your PPP loan, you must provide your lender with an application that includes the following:

• Documentation verifying the number of employees on payroll and pay rates, including IRS payroll tax filings and State income, payroll and unemployment insurance filings
• Documentation verifying payments on covered mortgage obligations, lease obligations, and utilities.
• Certification from a representative of your business or organization that is authorized to certify that the documentation provided is true and accurate, and that the amount that is being forgiven was used in accordance with the program’s guidelines for use.

 

QUESTION: What happens after the forgiveness period?

Answer: Any loan amounts that are not forgiven within one year from the date of disbursement of a PPP loan are carried forward as an ongoing loan with max terms of 10 years and maximum interest rate of 4%. An important note, deferment of any principal and interest on PPP loans (up to 6-12 months) is calculated from the date of disbursement of the loan and does not restart upon any determination of forgiveness or any loan amount carried forward.

 

QUESTION: Can I get more than one PPP loan?

Answer: No. Each businesses entity receiving a PPP loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans being made to the same entity.

QUESTION: What kind of lender can I get a PPP loan from?

Answer: All current SBA 7(a) lenders (learn more about 7(a) lending here) are eligible lenders for PPP. The Department of Treasury will also be authorizing new lenders, including nonbank lenders, to help meet the needs of small business owners.

 

 

QUESTION: How does the PPP loan coordinate with SBA’s existing loans?

Answer: Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs).

QUESTION: How does the PPP loan work with the temporary Emergency Economic Injury Grants and the Small Business Debt Relief program?

Answer: Emergency Economic Injury Grant recipients and those who receive loan payment relief through the Small Business Debt Relief Program may apply for and take out a PPP loan. More on the specifics of those programs can be found here:

• EEIG
• SBDR
  

Small Business Debt Relief Program

 

This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, 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.

SBDR FAQ’s

 

QUESTION: Which SBA loans are eligible for debt relief under this program?

Answer: 7(a) are eligible under SBDR so long as they are not issued as Paycheck Protection Program (PPP) loans, 504 loans, or microloans. Disaster loans are also not eligible (see EIDL for more information about these loans).

 

QUESTION: Can I apply for debt relief if I have a PPP loan?

Answer: You may separately apply for and take out a PPP loan, but PPP loans are not eligible for debt relief under SBDR.

QUESTION: Am I eligible for a 7(a), 504, or microloan?

Answer: Each of these programs has different requirement. Generally, your businesses must meet each programs size standards, be based in the U.S., be able to repay, and have a sound business purpose. For specifics on each program, see: https://www.sba.gov/funding-programs/loans

QUESTION: What is a 7(a) loan and how do I apply?

Answer: The 7(a) loan program is the SBA’s primary program for providing financial assistance to small businesses. The exact type, terms, conditions, and guarantees vary depending on which SBA program a loan utilizes. The SBA 7(a) loan program is targeted towards small business borrowers who need: (i) access to versatile financing; (ii) short-term or long-term working capital; (iii) acquisition funds for the purchase of existing business; or (iv) to the ability to refinance of current business debt. The SBA partners with approved banks/lenders who share a portion of the risk of the loan. The 7(a) program has a wide variety of programs, for more information visit this SBA link or to help find an SBA approved lender click here.

QUESTION: What is a 504 loan and how do I apply?

Answer: The 504 Loan Program provides loans to approved small businesses with longterm, below market fixed-rate financing for the acquisition of fixed assets for expansion or modernization (usually real estate or large equipment) and refinancing of large equpment and/or owner-occupied commercial real estate. Generally, loans are capped at $5 million, but some exceptions apply for loans of up to of up to $5.5 million.Applications for 504 loans are made through a nonprofit Certified Development Company with the help of third-party lenders (typically banks).

QUESTION: What is a SBA microloan and how do I apply?

Answer: The Microloan Program provides loans up to $50,000 to help small businesses and certain not-forprofit childcare centers to start up and expand. The average microloan is about $13,000. The SBA provides funds to specially designated intermediary lenders, which are nonprofit community-based organizations with experience in lending as well as management and technical assistance. These intermediaries administer the Microloan program for eligible borrowers.

QUESTION: I’m not familiar with SBA loans in general, are there resources to help me determine what’s best for me and help me apply?

Answer: You’re not alone here, the SBA has resource partners all over the U.S. that can help guide you through the loan application process. You can find your nearest Small Business Development Center (SBDC) or Women’s Business Center here.

Economic Injury Disaster Loans (EDIL) &

Emergency Economic Injury Grants (EEIG)

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 must 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.

EIDL & EEIG FAQ’S

QUESTION: Are businesses and private non-profits in my state eligible for an EIDL related to COVID19?

Answer: Yes, any business located within all 50 states, DC, and the designated U.S. territories that has experienced substantial economic injury, particularly from COVID-19, may apply for an EIDL.

QUESTION: What is an EIDL and what is it used for?

Answer: EIDLs provide small businesses with a working capital loans of up to $2 million to pay for expenses that could have been met had the disaster not occurred, including payroll and other operating expenses. . These loans generally are lower interest and have options for the deferment of principal and interest for up to 4 years.

QUESTION: Who is eligible for an EIDL?

Answer: The following businesses with 500 or fewer employees are eligible for an EIDL:

• Small businesses (including sole proprietorships, with or without employees)
  
• Independent contractors
  
• Cooperatives and employee owned businesses
  
• Private non-profits
  
• Tribal small businesses
  

 

QUESTION: My private non-profit is not a 501(c)(3). Is it still eligible for an EIDL and a grant?

Answer: Yes, if you are a private non-profit with an effective ruling letter from the IRS, granting tax exemption under sections 501(c), (d), or (e) of the Internal Revenue Code of 1954, or if you can provide satisfactory evidence from the State that the non-revenue producing organization or entity is a non-profit one organized or doing business under State law.

QUESTION: Who is eligible for an Emergency Economic Injury Grant (EEIG)?

Answer Those eligible for an EIDL and who have been in operation since January 31, 2020.

 

QUESTION: How long are Emergency Economic Injury Grants available?

Answer: January 31, 2020 – December 31, 2020. The grants are backdated to January 31, 2020 to allow those who have already applied for EIDLs to be eligible to also receive a grant.

 

 

QUESTION: If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan?

Answer: Yes. You may apply for a PPP loan regardless of whether you’ve already received an EIDL, unrelated to COVID-19 or you receive a COVID19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP.

 

QUESTION: How do I know if my business is a small business?

Answer: The SBA has a tool to help you determine if your business meets its size standards, click the link below to access this resource. You will need the 6-digit North American Industry

Classification Code for your business and your business’ 3-year average annual revenue.

SBA Size Standards Tool

QUESTION: How do I apply for an economic injury disaster loan?

Answer: Click the link found at the top of this section to access the direct application page, or click here to visit the SBA page for more information on EDILs. We highly recommend reaching out to your local SBA District Office for any questions you have about EDILs and your application process.

 

QUESTION: I need help with the EDIL process, or just the SBA process in general, where do I go?

Answer: The SBA resource partners are available to help guide you through the EIDL application process. You can find the nearest Small Business Development Center (SBDC), Women’s Business Center, or SCORE mentorship chapter at https://www.sba.gov/localassistance/find/.

COVID-19 Responses & Planning

We’re in uncharted territory with the COVID-19 pandemic. Businesses have been asked to respond to one of the most fluid disasters in modern history at an unprecedented pace. For many, it is nearly impossible to keep track of and plan for the effects of COVID-19. We’re here to help you decipher all the relevant information for your business and plan how you respond. If you’d like to speak with us, please click here.

For a list of helpful links, see below:

CDC Coronavirus Disease 2019 (COVID-19) Web page

Coronavirus Guidelines for America – 15 Days to Slow the Spread

Interim Guidance for Businesses and Employers to Plan and Respond to Coronavirus Disease 2019 (COVID-19)

Preventing Stigma Related to COVID-19

Share Facts about COVID-19

Information on Coronavirus Disease 2019 (COVID-19) Prevention, Symptoms and FAQ

The following interim guidance may help prevent workplace exposures to acute respiratory illnesses, including COVID-19, in non-healthcare settings. The guidance also provides planning considerations if there are more widespread, community outbreaks of COVID-19.

Below are recommended strategies for employers to use now. In-depth guidance is available on the CDC’s Guidance for Businesses and Employers web page:

• Actively encourage sick employees to stay home
• Separate sick employees
• Emphasize staying home when sick, respiratory etiquette and hand hygiene by all employees
• Perform routine environmental cleaning
• Advise employees before traveling to take certain steps
  • Check the CDC’s Traveler’s Health Notices for the latest guidance and recommendations for each country to which you will travel. Specific travel information for travelers going to and returning from designated countries with risk of community spread of Coronavirus, and information for aircrew, can be found on the CDC website.

• Additional Measures in Response to Currently Occurring Sporadic Importations of the COVID-19:
  • Employees who are well but who have a sick family member at home with COVID-19 should notify their supervisor and refer to CDC guidance for how to conduct a risk assessment of their potential exposure.
  • If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19 in the workplace but maintain confidentiality as required by the Americans with Disabilities Act (ADA). Employees exposed to a co-worker with confirmed COVID-19 should refer to CDC guidance for how to conduct a risk assessment of their potential exposure.

Common Issues Small Businesses May Encounter:

Capital Access – Incidents can strain a small business’s financial capacity to make payroll, maintain inventory and respond to market fluctuations (both sudden drops and surges in demand). Businesses should prepare by exploring and testing their capital access options so they have what they need when they need it. See SBA’s capital access resources.

Workforce Capacity – Incidents have just as much impact on your workers as they do your clientele. It’s critical to ensure they have the ability to fulfill their duties while protected.

Inventory and Supply Chain Shortfalls – While the possibility could be remote, it is a prudent preparedness measure to ensure you have either adequate supplies of inventory for a sustained period and/or diversify your distributor sources in the event one supplier cannot meet an order request.

Facility Remediation/Clean-up Costs – Depending on the incident, there may be a need to enhance the protection of customers and staff by increasing the frequency and intensity by which your business conducts cleaning of surfaces frequently touched by occupants and visitors. Check your maintenance contracts and supplies of cleaning materials to ensure they can meet increases in demand.

Insurance Coverage Issues – Many businesses have business interruption insurance; Now is the time to contact your insurance agent to review your policy to understand precisely what you are and are not covered for in the event of an extended incident.

Changing Market Demand – Depending on the incident, there may be access controls or movement restrictions established which can impede your customers from reaching your business. Additionally, there may be public concerns about public exposure to an incident and they may decide not to go to your business out of concern of exposing themselves to greater risk. SBA’s Resources Partners and District Offices have trained experts who can help you craft a plan specific to your situation to help navigate any rapid changes in demand.

Marketing – It’s critical to communicate openly with your customers about the status of your operations, what protective measures you’ve implemented, and how they (as customers) will be protected when they visit your business. Promotions may also help incentivize customers who may be reluctant to patronize your business.

Plan – As a business, bring your staff together and prepare a plan for what you will do if the incident worsens or improves. It’s also helpful to conduct a tabletop exercise to simulate potential scenarios and how your business management and staff might respond to the hypothetical scenario in the exercise. For examples of tabletop exercises, visit FEMA’s website at: https://www.fema.gov/emergency-planning-exercises

Government Contracting

If you are a government contractor, there are a number of ways that Congress has provided relief and protection for your business. Agencies will be able to modify terms and conditions of a contract and to reimburse contractors at a billing rate of up to 40 hours per week of any paid leave, including sick leave. The contractors eligible are those whose employees or subcontractors cannot perform work on site and cannot telework due to federal facilities closing because of COVID-19.

If you need additional assistance, please feel free to reach out to us to discuss your specific needs. Additionally, your local SBA District Office, depending on availability should be able to provide you with some assistance as well. You should also work

with your agency’s contracting officer, as well as the agency’s Office of Small and Disadvantaged Business Utilization (OSDBU).

Small Business Tax Provisions

Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship

 

This provision of the CARES Act aims to provide a refundable payroll tax credit for 50% of wages paid by eligible employers to certain employees during the COVID-19 crisis. The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis.

Wages of employees who are furloughed or face reduced hours as a result of their employer’s closure or economic hardship are eligible for the credit. For employers with 100 or fewer fulltime employees, all employee wages are eligible, regardless of whether an employee is furloughed. The credit is provided for wages and compensation, including health benefits, and is provided for the first $10,000 in wages and compensation paid by the employer to an eligible employee. Wages do not include those taken into account for purposes of the payroll credits for required paid sick leave or required paid family leave, nor for wages taken into account for the employer credit for paid family and medical leave (IRC sec. 45S).

• The credit is not available to employers receiving assistance through the Paycheck Protection Program.
  
• The credit is provided through December 31, 2020.

Delay of Payment of Employer Payroll Taxes

This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability.

• Deferral is not provided to employers receiving assistance through the Paycheck Protection Program