How The CARES Act Coronavirus Stimulus Package Could Help Your Small Business & Employees

Despite not being in the United States for long, the coronavirus (or COVID-19) has already had an enormous impact. Schools and businesses have closed, many states and cities have issued shelter-in-place orders, and citizens are wary about what the future holds. Fortunately, Congress has stepped up to battle the economic fallout of the coronavirus with a $2 trillion stimulus package — the largest in history. The primary focus thus far surrounds payouts to taxpaying citizens, but what about small businesses? Thankfully, this stimulus package, called the CARES Act, also offers relief for small business owners, too.

Most notably, the plan sets aside $350 billion for small business loans. The Paycheck Protection Program will provide loans that are backed by the Small Business Administration. Under this program, small businesses and nonprofits may receive up to $10 million to cover payroll, utilities, mortgage interest, and rent. The amount that a borrowing business qualifies for is based on its payroll from January 1 to February 29. If the borrower uses the funds for the aforementioned expenses and maintains the size of its full-time workforce, the principal of the loan will be forgiven.

These SBA-guaranteed loans will be available through banks and other traditional lenders and will have a maximum interest rate of 4%. To qualify as a small business, applicants must have 500 or fewer employees. While SBA loans typically have lengthy application processes, the Paycheck Protection Program will expedite the process so that businesses can have faster access to funds.

The Paycheck Protection Program isn’t the only relief offered to small business owners. The stimulus package also provides companies with tax relief to help further ease the burden caused by the pandemic. Businesses can take advantage of a 50% refundable payroll tax credit, which not only helps small business owners but also keeps more workers employed. Employer Social Security payroll taxes will be delayed, and net operating loss-reduction rules will be less stringent.

Finally, the stimulus bill sets aside $425 billion for the credit facilities of the Federal Reserve. Part of these funds will be available to small businesses, giving owners more funding opportunities to recover and get their businesses back on track.

Experts argue that more relief could be provided for small businesses, sole proprietors, and the self-employed. Whether or not additional aid will be available in the future is currently unknown. However, the stimulus package as it stands offers much-needed funding opportunities for businesses that have been — or will be — hit hard by the coronavirus.

In addition to the SBA loans outlined in the stimulus bill, the SBA is also offering additional aid to small businesses with its disaster relief loans. It’s another option to consider if the coronavirus has impacted your business.

Whether you’re an employee or an employer, everyone around the world is feeling the effects of the coronavirus pandemic. It’s easy to get wrapped up in panic or fear about what’s currently happening and what’s around the corner. Here at Merchant Maverick, we’re offering our support through our coronavirus hub. There, you can find the latest information about how to weather the COVID-19 storm as a business owner. We offer tips, advice, and resources that can help you keep your business on track. We understand the importance of small businesses, and we want to provide continued help and support when you need it the most.