CORONAVIRUS EMERGENCY SMALL BUSINESS LOANS
Updated: Apr 7, 2020
The “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act,” was recently enacted into law and part of it provide emergency relief to Small Businesses.See CARES Act generally.
The “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act,” was recently enacted into law and part of it provide emergency relief to Small Businesses. See CARES Act generally. Small business means any business who employees 500 or less individuals. See ID. The CARES Act helps Small Businesses during this time with emergency funding, tax extensions, tax credits and write offs. See ID. The purpose of this article is to briefly discuss two areas of emergency funding provided by the CARES Act. See ID.
The CARES Act provides for two new areas of funding for Small Businesses for economic stimulus: 1. The Paycheck Protection Program (“PPP”) and 2. Emergency EIDL Grants. See ID.
Small Businesses may apply for an Economic Injury Disaster Loan (“EIDL”) and pending the application for this loan they may receive an Emergency Advance EIDL Grant. See ID. EIDL’s cover small businesses with fewer than 500 employees and also covers entities that include sole proprietorship, with or without employees, or independent contractors. See ID. Loans under $200,000.00 do not require a personal guarantee. Businesses may be in business for less than 1 year, but must have been in operation prior to January 31, 2020. An applicant need not seek out credit elsewhere prior to applying. See ID. The Small Business Administration “(SBA)” may approve an applicant under this section based solely on the credit score of the applicant and can be approved without submission of a tax return or a tax return transcript or use alternative methods to appropriate an applicant’s ability to repay. See ID. Pending application for an Emergency EIDL loan, an applicant is eligible for up to $10,000.00 or less in a grant that needs not to be repaid and will be given to the applicant regardless of whether their application is approved or not. See ID . The grant may be used for paid sick leave, payroll, costs of supplies, rent or mortgages, and repaying debts that cannot be met due to revenue losses. See ID.
PPP loans cover small businesses with fewer than 500 employees and also covers entities that include sole proprietorship, however, a condition to obtaining the loan is that the business have employees that the business pays payroll taxes for or 1099 independent contractors and the business must have been in operation on February 15, 2020. See ID. These loans may be refinanced. See ID. This loan also does not require a personal guarantee or collateral as well. See ID . The first loan repayment is not due until at least 6 months have passed and up to 1 year. See ID. This loan may be forgiven, generally meaning, the borrower will not be held responsible if not repaid, if the loan was used to pay payroll, mortgage, rent, and utilities. See ID . The amount that would be forgiven is only the principal of the loan. See ID.
The full law can be found here: https://www.congress.gov/bill/116th-congress/house-bill/748/text
For more information and application of the above referenced loan visit: www.SBA.Gov.
For other small business issues that you may face, contact E. Garris Law Firm, LLC for legal advice. E. Garris Law Firm, LLC is capable of consulting on a number of issues, some of which you may believe is not legal, however, legal strategies may help your business considerably during this time. Contact us either by telephone call, text, email, or contact us form for quick, easy, and same day consultations.