03/30/2020
The recently passed CARES Act may assist small business owners. This is different from the originally passed Disaster Relief Act in that it has a ‘forgivable’ component to the funding; meaning that it would not have to be repaid.
The SBA should have their process in place to apply by this Thursday or Friday. This act is for the sole purpose of covering payroll for a 8 week period and if used in this manner, it will be forgiven. You may also borrow for additional items under this act such as interest for company debts, etc. but these items would not be forgivable and would have a 10 yr. repayment period with a maximum rate of 4%.
The amount of principal that may be forgiven is equal to the sum of expenses for payroll, and existing interest payments on mortgages, rent payments, leases, and utility service agreements. Payroll costs include employee salaries (up to an annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, and group health insurance premiums. If you would like
to use the Paycheck Protection Program for other business-related expenses, you can, but that portion of the loan will not be forgiven.
Hopefully this will be a help to some of my friend and clients who own small businesses.
The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by directing $349 billion towards job retention and business operating expenses.