CARES Act – Small Business Overview

Wednesday, March 25th, the Senate unanimously voted to pass the CARES Act ($2 trillion stimulus package). The CARES act is scheduled to be voted on in the House Friday, so it is still subject to change. With the wealth of new information surfacing daily, it can be overwhelming to know what decisions are best for your business.  We will do our best to provide updated information about changes to the CARES Act in a timely manner. Once the bill is finalized, we will develop a plan specialized to help your business fully utilize the CARES Act’s benefits.  The following is a brief overview of what we know so far.

Paycheck Protection Program (SBA Loans)

Purpose: The SBA will be providing loans to small businesses (< 500 employees) to help cover employee wages, group healthcare benefits, payments of interest on mortgage obligations, rent, and utilities during the period February 15 – June 30, 2020.

Loan Calculation: The maximum loan amount will be calculated by multiplying your average monthly payroll cost by 2.5. The average monthly payroll will be based on your payroll cost over the previous 12 months. The maximum salary per employee is capped at $100,000. The loan cannot exceed $10,000,000.

Loan Forgiveness Requirements: As most of you have heard, these loans can potentially be forgiven. However, in order to qualify for forgiveness, small businesses must provide supporting documentation verifying the loan was used for the allowed expenses as referenced above. Detailed accounting and complete and accurate documentation will be critical in order to take advantage of this provision. We plan to provide accounting services to assist your business in tracking these expenses and supplying the proper documentation to the SBA.  

Federal Expansion of Unemployment Insurance

The CARES Act increases federal UI benefits to $600 per week in addition to employee’s current state UI benefits through July 31,2020. The Act also extended UI benefits to independent contractors and self-employed individuals. The new benefit will be payable in arrears to staff already laid off.