For small businesses, the federal government has sent word: Help is coming. The $2-trillion CARES Act includes emergency assistance for small businesses affected by the COVID-19 outbreak. Here are 9 ways your business may benefit:
1. Paycheck Protection Program (PPP)
This is the cornerstone of small business assistance: A more-than-$350-billion loan program. Qualifying small business may receive zero-fee Small Business Administration (SBA) loans to temporarily cover payroll and keep workers employed. Loans may cover up to 8 weeks of operating costs including payroll costs, rent, utility costs, and mortgage interest. Payments of principal and interest may be deferred for six months. Interest will accrue during the deferral period. The full principal amount of the loans and any accrued interest may qualify for forgiveness, provided the borrower uses all loan proceeds for forgivable purposes established under the CARES Act. (As a certified SBA lender, Bank of the West will offer PPP financing.)
2. Loan Limits Increase
SBA Express loan limits have been raised from $350,000 to $1 million. Among other increases, SBA microloan limits have also been raised from $35,000 to $50,000.
3. Debt relief
If you already have an SBA loan, the SBA will pay all loan costs for 6 months – including principal, interest, and fees.
4. Economic Injury Disaster Loans
Eligibility is temporarily expanded for SBA economic injury disaster loans, while small businesses and non-profits impacted by COVID-19 can apply for an emergency advance of up to $10,000.
5. Payroll Tax Deferral
Employers can defer payroll taxes through the end of 2020, with deferred amounts to be paid back at the end of 2021 and the end of 2022.
6. Unemployment Benefits Increase
Workers who lose their jobs are eligible for 13 additional weeks of unemployment benefits, as well as $600 weekly payments to augment their usual unemployment checks.
7. Direct cash payments
Most adults will receive direct payments of $1,200 from the federal government, subject to income limitations. This is a one-time stimulus that will put cash in consumer’s pockets when they, small businesses, and the economy need it most.
8. Tax Filing Extension
The deadline to file and pay federal income taxes has been extended to July 15, 2020. The IRS has established a section focused on steps to help taxpayers, businesses, and others affected by the coronavirus.
9. Tax Credits for Paid Leave
Small businesses can receive tax credits for providing employees with paid sick leave or family and medical leave. You can find more information on the Department of Labor site.
Loans are subject to credit approval. Certain conditions apply. Please consult a tax advisor.
Disclosure: This document is intended only to provide a brief overview of some of provisions of the CARES Act intended to provide economic relief to small businesses. It is not intended to provide a complete description of all provisions of the CARES Act nor the terms and conditions of, or qualifications for, any programs thereunder.