How Your Small Business Can Benefit from the CARES Act
COVID-19 sent the country into economic turmoil. Now, several businesses are reopening in Maryland and DC. But many remain closed, with no certainty if and when they’ll be able to welcome customers again.
Federal legislation was passed in March to support small businesses during this challenging time. The CARES Act intends to help the economy by providing financial relief to individuals and businesses. CARES, which stands for “Coronavirus Aid, Relief, and Economic Security,” provides $2 trillion to economically impact seven key areas:
- Big corporations
- Small businesses
- State and local governments
- Public health
- Federal safety programs
If you’re a small business owner, you could stay afloat with help through the CARES Act.
How the CARES Act Can Help Small Businesses Struggling During COVID-19
The CARES Act provides relief to small businesses through programs such as the Paycheck Protection Program and the Economic Injury Disaster Loan program. These programs make it easier for small business owners to receive emergency grants and forgivable loans.
Companies with fewer than 500 employees may apply to both programs. The benefits can help small businesses pay their employees and other business expenses during the lockdown. CARES also provides contingencies for tax credits, counseling, and debt relief.
Financial Relief Programs Available to Small Businesses through CARES
Several options are available to small business owners:
- Paycheck Protection Loans
- SBA Economic Injury Disaster Loans
- SBA Emergency Cash GrantsIs My Small Business Eligible for a Paycheck Protection Loan?
Eligible businesses for paycheck protection loans through the Paycheck Protection Program include:
- Small businesses, tribal businesses, veterans organizations, and nonprofits with fewer than 500 employees
- Sole proprietors
- Independent contractors
- People who are self-employed
The Paycheck Protection Program provides loans to help businesses employ as many people as possible. Employers who utilize PPP loans and apply them toward allowable costs like employee compensation and benefits may qualify for loan forgiveness.
Forgiveness amounts vary by whether your average number of employees changes or you cut salaries for employees who make less than $100,000 per year. You may apply for both PPP and Economic Injury Disaster Loans (EIDLs) so long as the loans cover different business expenses.
Do I Qualify for an SBA Economic Injury Disaster Loan?
Businesses with fewer than 500 employees and private non-profit organizations may borrow up to $2 million through an Economic Injury Disaster Loan (EIDL) from the Small Business Administration (SBA). Businesses may use these loans to pay:
- Fixed debts
- Utilities, rent, and other bills
- Business adaptations and obligations
The SBA provides EIDLs to help companies cover losses from regional or national disasters. Now it’s providing low-interest funding to small businesses through EIDLs for COVID-19.
What are SBA Emergency Cash Grants for?
The SBA Emergency Economic Injury Grants can fund small businesses and private nonprofit organizations. Businesses and nonprofits operating since January 31, 2020, may receive up to $10,000 in emergency cash grants.
These cash grants may be used to pay for the immediate costs of running a business. Unlike PPP and EIDL loans, these emergency grants don’t need to be repaid. The CARES Act also waives the requirement that you can’t have credit elsewhere before receiving these funds. So, if you already have a line of credit or do not qualify for an SBA loan, you could still be eligible for an emergency grant.
Speak With a Maryland and DC Business Planning Lawyer Today
Operators of a small business know how crucial it is to prepare for the future. Unfortunately, it’s nearly impossible to plan for a pandemic. If you need funding for your business in Maryland or DC, find out how business planning lawyer Clifford M. Cohen can help you.
The Law Offices of Clifford M. Cohen have more than 35 years of experience helping small business owners navigate business planning. Call (202) 845-7036 for a free consultation or complete our contact form.