How to take advantage of CARES Act loans


The $ 2 trillion CARES law enacted last week sets aside billions of dollars to help struggling small businesses amid the economic disruption caused by COVID-19. These programs evolve quickly and update quickly. Here are some of the most recent details on what is in the first aid kit and how to seek help.

Economic disaster loans and loan advances
Small business owners in the United States can apply for an Economic Disaster Loan (EIDL) of up to $ 2 million through the Small Business Association (SBA). The loans have a low fixed interest rate of 3.75% and a long term repayment schedule of up to 30 years.

The loans are intended for small businesses with 500 or fewer employees. People who operate as sole proprietors or independent contractors are also eligible. To be eligible, businesses must have been directly affected by COVID-19.

Under EIDL loans, the SBA provides loan advances (essentially emergency grants) of up to $ 10,000 that would be deposited into a company’s account within three days of the request. Grant money should be used for things like rent or mortgage payments, maintaining payroll during business interruptions or downturns, and meeting the increased costs of securing unavailable materials. due to disrupted supply chains.

You can apply for an economic disaster loan through the SBA here.

Paycheque Protection Program Loans
These loans are meant to encourage businesses to keep their employees on staff by providing small business loans of up to $ 10 million for payroll and certain other expenses. If employees are kept on the payroll for eight weeks, the SBA will cancel the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100% of the loan is repayable; However, if you also received an emergency grant under the EIDL program, this will reduce the amount of the payday loan eligible for forgiveness.

Payday loans are intended for businesses with 500 or fewer employees. Sole proprietorships, self-employed workers and independent contractors are eligible.

Paycheck Protection loans do not come directly from the SBA. Instead, you would go through a qualified individual lender to grant one of the SBA guaranteed loans. The 350 billion dollars reserved for these loans are not yet available, although they should be in the coming days and weeks. To prepare to apply, you need to calculate your total salary costs, including employee benefits, and your utility costs.

Nav, a company that helps businesses manage their finances and credit, has implemented a calculator on their website to help businesses determine how much money they’re likely to qualify for. Give it a try here.

Loan payments will be deferred for six months and no collateral or personal guarantee is required. The loans have a two-year term and an interest rate of 1%, with the idea that most businesses would ask for a forgiveness before that date. Lenders started receiving applications on Friday April 3, although applications for self-employed workers and independent contractors do not open until April 10.

By the end of the day on Friday, April 3, the program had issued more than 13,000 loans valued at more than $ 4.3 billion, according to the SBA.

Get outside help
These new loan programs should be of great help to promotional product companies going through tough times. There is a lot of fine print and moving parts involved in the app. It is a good idea to seek professional help. If you don’t have a lawyer, you may be able to take advantage of a new program set up by the Lawyers for Good Government Foundation (L4GG). The nonprofit network of more than 125,000 lawyers has launched a remote small business legal clinic, offering pro bono legal consultations to small business owners to help them understand the options available under the COVID stimulus package -19 and other grant and loan programs.

Eligible small businesses with 25 or fewer employees will be offered free 45-minute consultations with volunteer lawyers who can answer legal questions and help owners determine the best course of action for their business. You can register here to be notified when a clinic is available near you.

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