This is not a drill. If you are one of the many small business owners in a tailspin right now due to the COVID-19 pandemic, take heart, the CARES Act is here to help. When work stops, so does your small business and its ability to grow, maybe even survive. It’s one thing not to have clients, but quite another when you are prevented from serving them due to an outside force.
The news is not good for businesses having the opportunity to open their doors back up to full capacity for the coming weeks. What can your small business do to make sure there is a business to open back up again? The CARES Act was recently passed to meet the urgent needs of your small business to keep it going and make sure your employees stay employed. But what do you need to know right now without having to read endless pages on the SBA site to help you get started on your COVID-19 crisis plan?
The first thing to remember in either of these loan programs now available to your small business under the CARES Act; its not so much about keeping you up and running as it is keeping your employees in their jobs. The CARES act unilaterally seeks to keep workers in jobs, not just small businesses in business. If it seems like saying the same thing, the government doesn’t see it that way.
Small businesses make up a staggering amount of jobs in the U.S. economy. That means the government has a vested interest in keeping the small business moving in the right direction. The CARES Act is their answer to this problem of keeping the economy in check and workers on your payroll.
The CARES Act offers two separate loan programs for you to financially be able to keep your workers employed:
The Paycheck Protection Program is one of the loans available through SBA for your small business to be able to keep your employees on the payroll. The application for this program went live on April 3rd, 2020 on the SBA site. This program allows your small business to be able to continue to pay your employees while their work is deferred.
Under the PPP, if your small business is eligible, you will be entitled to be loaned 8 weeks of your average payroll expenses (amount subject to what the payroll expenses were the prior 8 weeks before application), plus 25% to meet payroll expenses. This program offers loan payment deferment for up to 6 months of receipt. Under this program, and probably the most important part of it, a portion of your small business’s PPP loan is forgivable as long as you maintain your current payroll expenses. That means, you cannot apply for a PPP and then let your employees go. Under this program, you are agreeing to keep your employees employed during the COVID-19 crisis. This loan is available for small businesses and has a cap of $10 Million per business.
The Economic Injury Disaster Loan and Grants Program is currently live on the SBA site and the application process is already underway. Under this program, your small business is entitled to be covered for expenses your small business is unable to pay during the COVID-19 crisis. The main point of this loan is to provide working capital to small businesses experiencing a temporary loss of revenue due to the COVID-19 crisis. For those businesses facing dire economic impact, the good news for this loan advance/grant is the monies are made available within 3 days of the successful submission of the loan application. If you need money to keep your employees employed and business moving, this program may be your best bet.
If you are wondering how the terms work on this program under the CARES Act, we have good news; this loan does not have to be repaid. This not only keeps your small business running but prevents it from taking on debt that could prevent it from recovering entirely.
If we have learned nothing else from all of this, its that revenue can be here today, flowing through our front doors, and suddenly completely gone tomorrow. How you handle your small business’s expenses today and in the future, along with a worthy disaster recovery plan, will determine your small business’s ability to thrive. The CAREs Act is a nice save, but you can't count on something like it for everything that can happen. It just could be this jarring that helps small business owners reach for the stars while planning for a crash back to earth. How can a small business do both at the same time?
PEOs are a great way for small businesses to be able to grow and plan for disaster at the same time. PEOs provide excellent HR services and world-class benefits at a fraction of what you are paying individual vendors right now. Best yet, during times of extreme crisis, such as this, they work with their clients to ensure their employees are being taken care of when it matters most. If you’d like to find out more about how a PEO can help you during the COVID-19 crisis today and what it can do to help you grow in the future, contact us today for a free consultation.
If you’d like to find out more about how PEOs can help you provide great benefits and payroll management at less than you are paying now, contact us today for a free consultation.
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