As we all continue to deal with the impact of the pandemic known as the Coronavirus (Covid 19), there could be some relief on the way. As our government continues to search for solutions to help redirect a struggling economy, there has been a tentative agreement reached that would provide financial support for individuals and businesses alike, and it can’t come soon enough.
As of today, March 27, 2020, and after much debate and deliberation, a bi- partisan, $2 trillion dollar bill was passed by the Senate and is now waiting for the President to enact it into a Law in order to jump-start the American economy and help ease fears. But what does all of this really mean? What will it mean for small businesses? Although we do not yet know the exact final details, each day brings new information and here’s what we know so far and you can read the full text of the Act here.
First, let’s look at the allocation of funds. The $2 trillion in total funds are allocated to cover the following areas:
Direct payments to individuals and families
Small business loans
Unemployment insurance expansion
Loans to distressed big companies
Local and state governments who are financially exhausted due to Coronavirus related response
Let’s look at what this means for small businesses and nonprofits.
Small businesses are incentivized through this Act to keep employees on payroll by gaining access to federally guaranteed loans using community banks. These loans are called Small Business Paycheck Protection loans and can be used to keep the business open and cover payroll, and any other essential functions for the period of February 15, 2020 – June 30, 2020. A lot of small businesses have already made the hard decision to layoff all or some of their employees, but this loan is still available if you recall those employees within a certain date. One item of note here, is that the CARE Act does impact the Families First Coronavirus Response Act (see our article) and makes changes to the coverage under the Emergency FMLA for those that were laid off, but then recalled or rehired. The eligibility requirement of being employed for 30 days prior to the EFMLA leave will be based on if they were employed at the company for the 30 days prior to the layoff.
Unemployment benefits and terms have been extended as well under the CARES Act. Unemployment benefits would increase in length of terms, potentially adding an additional 13 weeks as well as increasing payouts by as much as an additional $600 a week for up to 4 months, though not finalized. The unemployment program under this Act also expands to categories that are typically not eligible reasons for unemployment benefits including those that may have voluntarily resigned due to COVID-19 as well as self-employed and contractors.
There are a lot of intricacies of this Act and while we strive to keep small businesses abreast of current changes that may have an effect our clients and small business community, we recommend that you reach out to your CPA and/or Accountant regarding guidance on the loan process and details of the loan options available. If you do not have a resource in that area, we have trusted advisors that we recommend and can be of assistance regarding specific loan terms and options best suited for your small businesses.
Listed below are two sources who would be helpful in navigating the options available to small businesses and nonprofits.
This is only begins to scratch the surface of what is available to small businesses and their employees to help support their economic viability and ongoing operation. We strongly encourage you to speak with a CPA, Accountant or other financial specialist that is a trusted and reliable resource to help guide you through the options available to you.
Be well and stay strong, – Robert, Client Relationship Manager – email@example.com