April 1, 2020
The Coronavirus Aid, Relief, and Economic Security (CARES) Act allocated $350 billion to help small businesses keep their workers employed during this pandemic and economic downturn. There are several ways for small businesses to benefit from this act. I will highlight two of them in this blog. The Paycheck Protection Program and the Economic Injury Disaster Loans and Loan Advance.
Economic Injury Disaster Loans & Loan Advance
Small businesses in all states including Washington DC & territories are eligible to apply for an Economic Injury Loan advance up to $10,000. This SBA program provides small business with working capital up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Funds will be made available directly into your bank account within 3 days of successful application, and this loan advance WILL NOT HAVE TO BE REPAID. It is basically a grant. The funds are limited so fill this out today. Go to www.SBA.gov and click the yellow bar at the top and fill in the application. It will only take minutes.
Paycheck Protection Program
The attached PDF outlines how small businesses can access an initiative called the Paycheck Protection Program providing 100% federally guaranteed loans. The best part of this program is that thy loans may be forgiven if borrowers maintain their payrolls during the Covid crisis or restore their payrolls after. The Loan advance above was for right now immediate help and the Paycheck Protection is for the more long term need to keep your business going.
In a very simple to understand format the US Chamber of Commerce has outlined:
a) eligibility requirements
b) what lenders are looking for
c) how much you can borrow
d) will this loan be forgiven
There are limited funds for this program so if you think you will qualify, the time is now to take action.
Click here for the guide: CARES Act Small Business Guide
There are limited funds for this program so I would recommend taking action now. I would recommend that you consult your tax professional. To help you find the forms on the US Treasury website please visit this link: https://home.treasury.gov/policy-issues/top-priorities/cares-act/assistance-for-small-businesses
Their website says that you will need the following documentation to fill in the application:
* Payroll reports for 2019 and 2020 year to date showing the following by employee and/or officers:
* Gross wages
* Paid time off
* Paid vacation
* Pay for family medical leave
* State and local taxes (form 940, 941, or 944)
* 1099’s for independent contractors (if applicable)
* Completed 2019 tax return OR 2019 Profit and Loss Report and Balance Sheet
* Documentation Showing:
* Funds received in the form of an Economic Injury loan since 1/31/20
* Payments for group health care benefits including premiums paid in 2019 to 2020 year to date
* Payment of any retirement benefits paid in 2019 and 2020 year to date
* Quarterly IRS forms 940, 941, or 944 for the last 4 quarters available:
* Be filing away documentation in the form of canceled checks, payment receipts, and bank statements showing payment of the following items incurred/to be incurred from 2/15/20 to 6/30/20:
* Mortgage Interest (if you own a facility for either company, which has debt against it)
* Rent payments
* Utilities paid