CARES Act Information for Small Businesses

The coronavirus is causing financial difficulties for businesses everywhere. The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on March 27, 2020. The bill has allocated $350 billion to help small businesses struggling to cover payroll and operating expenses due to the COVID-19 pandemic.

Government programs can be daunting and complex, and it is essential your business understands the bill entirely before applying, since you may be required to repay some or even all of the loans given. Understanding your capital needs before applying can help ensure that your business is eligible and choosing the best resources for your unique business situation.

The CARES Act is a finite program, so once resources are depleted they will be gone. It is advisable to seek guidance from a small business loan expert to help walk your business through the comprehensive government plan.

When Can I Start Applying?

  • Small businesses and sole proprietors can begin applying on April 3.
  • Independent contractors and self-employed individuals can apply beginning on April 10.

Where Can I Apply? You can apply though any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. There will be other regulated lenders available to make these loans, but they must be approved and enrolled in the program.

The Key: Consult with your local lender as to whether they are participating in the program. It is essential to seek guidance as soon as possible given the loan cap on the program.

Need help getting started? Contact a Limitless small business advisor to promptly start the process.

SBA Paycheck Protection Program

The Paycheck Protection Program provides small businesses with zero-fee loans of up to $10 million to cover payroll and other operating expenses. Up to 8 weeks of payroll, mortgage interest, rent, and utility costs can be forgiven. Payments on principal and interest are deferred for a total of 6 months to a year after disbursement of the loan.

Your small business is able to apply if you were harmed by COVID-19 between February 15, 2020 and June 30, 2020.

Your Business May Be Eligible If:

  • Your business was in operation on February 15, 2020
  • You are a small business, a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, or tribal business concern that has fewer than 500 employees
  • You are a sole proprietorship, independent contractor, or self-employed
  • Your business does not have more than 500 employees per physical location

What you need to know: Your lender will forgive your loan for the amount of payroll costs plus payments of mortgage interest, rent, and utilities incurred only during the 8-week period after the loan is disbursed.  Your business MUST understand its payroll costs to determine the correct loan size. Without understanding the guidelines of the program, your business is at risk of repaying some or even all of the loans with interest. Any loan amounts not forgiven are carried forward as an ongoing loan for two years at an interest rate of 0.5 percent.

Documentation verifying the number of employees on payroll, their pay rate, IRS payroll and state income tax filings, and unemployment insurance filings, and documentation verifying payments of rent, mortgage interest, utilities, and other debt are required for loan forgiveness. Please consult a Limitless small business advisor to ensure the loans your business takes will be forgiven.

SBA Economic Injury Disaster Loans

The CARES Act creates a new emergency grant of $10,000 for small businesses that apply for an SBA economic injury disaster loan (EIDL).  EIDLs are loans up to $2 million with interest rates of 3.75% for businesses and 2.75% for nonprofits, and principal and interest payments deferred up to 4 years.  The EIDL loans may be used to pay for expenses that could have been met had the disaster not happened, including payroll and other operating expenses

Your Business May be Eligible If:

In addition to the entities that are already eligible for SBA disaster loans, eligibility is expanded to include:

  • Business entities with 500 or fewer employees:
  • Sole proprietorships, with or without employees
  • Independent contractors
  • Cooperatives and employee owned businesses
  • Tribal small businesses
  • Private non-profits of any size.

Where to Apply:

You can apply for an EIDL online( with the SBA.

What you Need to Know: If you apply for an EIDL and the grant, you can still apply for a Paycheck Protection loan. However, the amount forgiven under a Paycheck Protection loan will be decreased by the $10,000 grant. Please consult with Limitless business resource expert to understand how your business should use this loan.

Your Business Will Benefit From Talking to an Expert

As we mentioned above, this government program is daunting and complex and likely to change over time.  To ensure your business is not responsible for paying back loans + interest, it is essential you consult with a small business loan expert to ensure you are taking advantage of the right program for your capital needs. Resources are limited, so it is essential to act fast. Schedule a FREE consultation with a Limitless expert TODAY!

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