For businesses that have been affected by the global pandemic of the Coronavirus (COVID-19) spread, there is a light at the end of the tunnel: The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). Many businesses have experienced layoffs, furloughs, and closures; some have even been stuck in a state of limbo. With the CARES Act, businesses can now keep their employees on staff and keep their doors open for the time being. It is the aim of the Act to keep employees paid and business owners’ doors open with the relief loans to be available.
The Act ensures a guarantee from the federal government to eligible small business which can be forgiven if the borrowing business owners maintain their payroll during the pandemic crisis or rehire/restore their payroll after the crisis has passed.
In order to be eligible (amongst other criteria) the following requirements must be met: the business must be within SBA’s size standard and have fewer than 500 employees with a sole proprietor, an independent contractor, or an individual that is self-employed who operates the business.
Lenders will evaluate your eligibility based off several criteria like the above mentioned. They will also be ensuring that the business was in operation prior to February 15, 2020 and will ensure that the business provide a good faith certification. Things lenders will not be concerned with at this time are a borrower’s failure to secure a credit line elsewhere or collateral.
Loans provided can be up to 2.5 x the borrower’s average monthly payroll costs (the sum of included payroll costs less the sum of excluded payroll costs) with a $10 million limit. These loans will be forgiven for eligible borrowers. A borrower is eligible for loan forgiveness equal to the amount of the loan that is spent over the course of 8 weeks after the loan is approved for the following: payroll, interest of mortgage obligations, rent, utilities, or additional wages.
Undoubtedly, there are many conditions to these loans and navigating them might appear daunting. For that reason, we’ve provided a comprehensive breakdown from the U.S. Chamber of Commerce here and as always, you can contact your trusted HR experts at Resourcing Edge: https://resourcingedge.com/contact-us
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