If you’re a small business owner in the US, the new 2 trillion dollar CARES Act passed by the United States Senate—and in line for face track by the House of Representatives—represents a very significant lifeline.
This bill includes $350 million earmarked for small businesses that are having trouble keeping expenses paid while the pandemic is on.
If you maintain your payroll during the COVID-19 pandemic—no layoffs—you can receive up to 8 weeks of cash-flow assistance.
This comes in the form of 100 percent federally guaranteed loans, but if you can prove payroll is maintained through the course of the pandemic the portion of this money you use to cover payroll, rent, utilities, and interest or mortgage obligations will all be forgiven.
Essentially, the government will pay your employees if you keep giving them checks, even when you’ve had to close shop or they need to stay home.
This direct assistance only applies to small businesses, which for the purposes of the bill are defined as having less than 500 employees.
The proposal is retroactive to February 15, 2020, so if you’ve already laid off your workers you can put them back on the payroll and give them a check for the time they’ve missed. Just make sure to work through the math and document all your financial records.
If you’ve contracted with a federal agency, the bill also includes special protection for you: all federal agencies will be required to extend contract performance periods through the national emergency. Small business contracts are also required to be promptly paid.
If you’ve taken out a 7(a), Community Advantage, 405, or Microloan, you shouldn’t have to worry about it for 6 months. The Small Business Administration (SBA) will pay all principal, interest, and fees for existing loans for a six-month period.
It may take a week or more for these CARES act programs to be set up, but the bill comes with a requirement that everything be up and running within 15 days from the time the bill is signed into law.
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Stay safe everyone.