With an unprecedented health crisis underway, uncertainty looms just about everywhere. The future of the economy is particularly unnerving – particularly for small businesses that are vulnerable to economic volatility. What does this all mean for you? And how can the recently passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provide stability in an unstable time?
Of the $2 trillion funds in the bill, $377 billion was set aside to support businesses with fewer than 500 employees. Here’s a quick overview of its major provisions for small businesses.
Forgivable loans.
The Small Business Administration (SBA) received $350 billion for the Paycheck Protection Program (PPP). The PPP provides forgivable loans to employers that keep workers on the payroll at the same rate for eight weeks following the issue of the loan. Businesses can receive loans up to $10 million per business with interest rates no higher than four percent to cover costs for rent, mortgages, payrolls and utilities.
Economic Injury Disaster Loan Advance.
The CARES Act also allotted $10 billion for Economic Injury Disaster Loans (EIDLs). Though EIDLs were available to businesses before, the bill made businesses affected by COVID-19 eligible to receive them. Businesses can receive EIDLs up to $2 million. Depending on what they’re used for, a business can receive both EIDLs and PPP loans. Small businesses can also receive emergency grant advances up to $10,000 to cover payroll, sick leave and other operating costs.
Tax credits.
The CARES Act made a few small changes to the Families First Coronavirus Response Act (FFCRA) that mandated businesses to offer paid family and medical leave (FMLA) and paid sick leave to employees. Under the CARES Act, paid family and medical leave (FMLA) caps at $10,000 per employee or $200 per day. Paid sick leave is capped at $5,110 per employee, or $511 per day – and $200 per day and $2,000 per employee caring for a family member at home due to school closures or quarantine. To help manage the costs associated with providing these payments, the government offers tax credits to small businesses.
Running a small business can be difficult on its own – a national state of emergency on top of it is certainly unsettling. But as we navigate these difficult and unprecedented times, know that numerous resources are available to you and your business. For more information about these loans and other resources for small businesses, check out these helpful guides:
- S. Chamber of Commerce Coronavirus Guide
- Small Business Administration Small Business Guidance & Loan Resources
- Coronavirus Emergency Loans Small Business Guide and Checklist
Using a local insurance FMO ensures that you get all of the necessary information and resources you need to keep your business growing even during a pandemic. If you have any questions about how we can help market your insurance business during this challenging time, give us a call at 919-460-6073 or email us at [email protected].
