In these extremely difficult times facing small businesses from EVERY industry, the federal government has passed a bill providing assistance in many forms!
The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a large piece of legislation, but the benefits it can provide makes it very much worth fully understanding.
The following article from the Small Business and Entrepreneurship Council (SBE Council) summarizes the CARES Act, provides extremely relevant Q&A covering issues critical to small business, explains the various resources provided in the Act, and offers links to the appropriate websites and organizations that can help…
The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed the Senate in the early morning hours of March 26 by a vote of 96-0. As I said in a media statement following passage:
“The House must act quickly, as every hour of every day matters to the survival of many small businesses across America that desperately need a financial lifeline during this unprecedented time.”
As of this writing, the House says it will vote on Friday, March 27. I do hope they can do this sooner. According to the Wall Street Journal and The Hill, a record 3.28 million workers applied for unemployment benefits last week.
In this update, we cover key pieces of the CARES Acts and provide links so readers can review the details. (The full text of the legislation is here.)
CARES Act Details
There are a lot of summary documents that have been provided by committees, congressional leadership and others, but let’s start first with a Q&A document provided by GOP Minority Leader Kevin McCarthy. The Q&A provides a broad outline of key features of the CARES Act, including small business provisions. Highlights of this document as it relates to small businesses, entrepreneurs and the self-employed, include:
Q: Unemployment Insurance – are the self-employed, gig workers, and contractors eligible? A: Yes, the bill expands unemployment benefits to cover more workers including self-employed and independent contractors, like gig workers and Uber drivers, who do not usually qualify for unemployment. Overall, the bill provides $250 billion in funding for expansion of unemployment benefits, the largest increase ever.
Q: Can small businesses can hire back previously fired employees and still have the [new SBA 7a Paycheck Protection Program] loans forgiven? If so, what is the hire-back date? A: Yes. There is flexibility in the program to allow businesses to hire new, or returning employees, by June, 30, 2020, and still qualify under the headcount requirements.
Q: How quickly will business be able to access loans? A: We are working with the SBA on capacity issues, including onboarding new lenders. The SBA is assuring the Small Business Committee that they are ready to stand up all of the requirements within the Senate bill as quickly as possible.
Q: Employee retention credit – how will this work? A: The Employee Retention Credit provides a refundable payroll tax credit equal to 50 percent of up to $10,000 in wages per employee (including health benefits) paid by certain employers during the coronavirus crisis.
The credit is available to employers:
● whose operations were fully or partially shut down by government order limiting commerce, travel, or group meetings due to coronavirus, or
● whose quarterly receipts are less than 50% for the same quarter in the prior year.
Wages paid to employees during which they are furloughed or otherwise not working (due to reduced hours) as a result of their employer’s closure or economic hardship are eligible for the credit.
However, for employers with 100 or fewer employees, all employee wages qualify for the credit, regardless of whether they are furloughed or face reduced hours.
To prevent double dipping, employers that receive SBA 7(a) Paycheck Protection Program loans are not eligible for the credit. Additionally, wages that qualify for the required paid leave credit are not eligible for the credit.
The credit is for wages paid by eligible employers from March 13, 2020 through December 31, 2020.
Read the rest of the article at the SBE Council website by clicking the link below..