At Boostability, we are committed to helping small businesses succeed online. Everything we do, every single day, is geared towards helping our small business clients, which are the backbones of economies. At this time of uncertainty surrounding the market and the COVID-19 pandemic, we’re providing valuable resources to help businesses navigate this time and come out the other side stronger than ever.
At the end of March, the United States Congress passed the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, designed to stimulate the economy until the uncertainty passes. There’s benefits for individuals including a $1,200 recovery stimulus check sent to every taxpayer. But they also designed parts of the Act are designed specifically to help small businesses.
The Paycheck Protection Program
The Paycheck Protection Program (PPP) is specifically designed for small businesses to give up to a $10 million loan. But the key here is that loan is forgivable under certain circumstances ifyour business meets the milestones outlined. It’s part of the Small Business Association (SBA) loan program designed for small businesses to keep paying their employees and essentially keep the lights on without burdening them with a huge amount of debt once the economy recovers. The government set aside approximately $349 billion just for this program.
The PPP is meant for companies with less than 500 employees, full time, part time, or other. Non-profits, those who are freelancers, self-employed, contract or gig economy workers, or sole proprietors can also apply. Companies can apply for up to a $10 million loan with 1% interest.
In order to be forgiven for the loan, the businesses must continue paying employees at their normal rates for at least eight weeks, or rehire employees who were laid off before June 30th. The money can go towards payroll, mortgage interest, rent, or utilities also over eight weeks. In order to qualify, a business would need to show payroll over the past year.
You can find more information on how to apply and if you qualify here. Small businesses can apply for the program until June 30th, 2020. Though apply as soon as possible because funds could run out before that deadline. The government grants these loans on a first-come basis. You can also apply directly through your local bank or lenders.
Expansion of the SBA Economic Injury Disaster Loan (EIDL) Program
Much of the CARES Act surrounds the Small Business Administration, or SBA. In the past, the SBA has offered disaster loans and assistance to small businesses. Usually those in the path of natural disasters. But the CARES Act expands the meaning of disaster. In this case, to include COVID-19.
This expansion of the Act includes a $10,000 loan advance to help cover immediate costs. The loan has a 3.75% interest rate, and for nonprofits, it’s at 2.75%. And once approved, the advance money comes in within three days. Also, applicants don’t have to repay this advance, even if they are denied an overall EIDL. However, if approved, they do have to pay the rest of the EIDL loan, which goes up to $2 million. There is more flexibility around the EIDL program and how the funds can be used compared with the PPP which is just for payroll and location services.
For those who do get an EIDL, they can also refinance it into a loan through the PPP further down the line. In this case, that loan would not need to be repaid. Though it is possible to get two separate loans through these two different channels. There are some stipulations for those who try to get both loans. And it’s encouraged that you talk with your accountant or loan officer before pursuing this route.
You can apply for the SBA’s EIDL Program here.
Updated Business Tax Options
The government also changed tax policies for small businesses in the CARES Act. Those who face business shutdowns or a decline in revenue of more than 50% compared to a year ago can get a refundable tax credit under the Employee Retention Credit. This 50% credit goes toward money that would have paid workers from March 13th-end of year. And for those who don’t qualify for the Paycheck Protection Program loan can now delay payment of payroll taxes — including the social security tax. Business owners must pay half of the deferred tax payment by end of year 2021 and the other half by the end of 2022.
The CARES Act also provides an expansion to existing unemployment insurance. Payments to those with the insurance get boosted by $600/week for the next few months.
Beyond the federal response for small businesses, additionally many states in the United States have also created programs specifically to help small businesses. We encourage you to go to your local city or state government to find out additional resources that may be available in your local area.
We understand there’s a lot of uncertainty in the marketplace right now. These loans and programs specifically for small business are designed to help until the economy can regain its footing. For additional help in building up your online presence to get more customers to your site, you can contact us here at Boostability 800-261-1537. We have plans for any small business budget.