A $2 trillion stimulus package designed to support individuals and businesses during the coronavirus pandemic has been signed into law by President Trump.
The measure offers $377 billion in federally guaranteed loans to small businesses and establishes a $500 billion government lending program for distressed companies.
It also increases unemployment benefits for laid-off or underemployed workers and provides a $1,200 payment for adults earning up to $75,000 per year or married couples earning up to $150,000. Families falling under these thresholds would also receive $500 per child.
We’ve highlighted a few provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act that directly benefit small businesses.
Disaster Loan & Emergency Grants
SBA’s Disaster Loan program provides small businesses with loans of up to $2 million to recover and rebuild after disaster losses.
Personal guarantees on loans below $200,000 are waived, as well as the requirement that the applicant must have been in business for one year and the credit elsewhere requirements.
Emergency Grants of $10,000, are also available to provide paid sick leave to employees, maintain payroll, meet increased costs to obtain materials, make rent or mortgage payments, and repay obligations that cannot be met due to revenue losses. Funds will be distributed within three days and come in the form of a loan advance, however, the advance does not need to be repaid, even if the applicant is subsequently denied.
Applications can be submitted here.
Paycheck Protection Program
Loans made under the U.S. Small Business Administration’s Paycheck Protection Program and provides $349 billion to fund loans.
The loans authorized are for a maximum of 2.5 times average monthly payroll or $10 million, whichever is less, and have a maximum interest rate of 4%. They can be used for payroll, group health care benefits, salaries and commissions, mortgage interest, rent, utilities and debt interest.
Payments on the loans will be deferred for at least 6 months, and SBA will forgive amounts paid in the first 8 weeks after receiving a PPP loan for payments made towards qualified expenses predating Feb. 15, 2020. Forgiveness will be reduced, proportionally, should the recipient reduce workforce or wages, unless the reduction occurred within 30 days after passage of the Act and was reversed through rehiring or restoration of wages before June 30, 2020.
To be eligible for an SBA PPP loan, newspaper publishers must have 1,000 employees or less. Sole proprietors, independent contractors and other self-employed individuals are also eligible.
SBA-approved lenders can be found here.
Express Loans
The Act also increases the maximum amount of an SBA Express Loan – a Section 7(a) loan from a qualified SBA lender that is processed faster than a regular loan. The maximum will be increased from $350,000 to $1 million through the end of this year.
Assistance
The Wisconsin Small Business Development Network, a resource partner of the SBA, is helping small businesses apply for the loans and has created a web page to help business owners understand the qualifications and application process.
Consultants across the network’s 13 locations are working remotely to assist clients.
Updated (March 28, 2020) –
With a voice vote from the House, Congress gave final approval on Friday to a $2 trillion stimulus package designed to support individuals and businesses during the coronavirus pandemic.
The measure, which would offer $377 billion in federally guaranteed loans to small businesses and establish a $500 billion government lending program for distressed companies, heads to the president’s desk for signature.
Original (March 26, 2020) –
A $2 trillion stimulus package passed by the Senate on Wednesday includes loans and grants for corporations and small businesses, increased unemployment benefits for laid-off or underemployed workers, and a $1,200 payment for adults earning up to $75,000 per year or married couples earning up to $150,000. Families falling under these thresholds would also receive $500 per child.
Since the typical small business carries only enough cash to last for 12 days without new revenues, how quickly the payments are made is a significant concern, The New York Times reports. In the best-case scenario, small businesses could see funds by next week.
The bill includes $350 billion in loans for small businesses — employers with 500 employees or fewer — to help cover expenses for up to 10 weeks. Up to eight weeks of the guaranteed loans would be forgivable if businesses either maintained all employees of rehired those that were laid off by June.
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Approximately $500 billion would go to large corporations, including airlines.
The legislation would delay employers’ typical 6.2 percent Social Security tax on employee wages for two years, with half of the tax being paid by December 31, 2021, and the other half by December 31, 2022.
The bill, which now moves to the House for approval, would also expand unemployment benefits for up to four months.
