ABOUT THE CARES ACT
Mary Ann Lacey-Gray, CLTC, President, UMS
The Coronavirus Aid, Relief, and Economic Security (CARES) Act includes a number of programs to help small business owners. These loans temporarily expand eligibility for SBA economic injury disaster loans (EIDL) and provides an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within 3 days of applying for an SBA Economic Injury Disaster Loan (EIDL). To access the advance, you must first apply for an EIDL and then request the advance.
The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent, and mortgage payments. To determine which loan is best for you, you can view a comparison below.
The best source of information will be your accountant and/or attorney as UMS is not able to provide specific legal or tax advice, or recommend any tax plan or arrangement. However we wanted you to be aware that there are programs available to help. So we have put together some information for general educational purposes. As we work through this difficult time together, it is very important to protect our families and be there for our clients to help calm their fears and transact business as they need us to do.
TYPES OF AID AVAILABLE
There are three programs tailored to they types of assistance you may need:
The Paycheck Protection Program (PPP) can provide capital to cover the cost of retaining employees
The Economic Injury Disaster Loan (EIDL) can provide borrowers with access to financing.
The chart here explains the key differences between the PPP and EIDL.
The Emergency Economic Injury Grant can provide an infusion of a smaller amount of cash to cover your business immediately. Here's a brief overview of how the grant works:
Within 3 days of applying for an SBA EIDL, an emergency advance of up to $10,000 to small businesses and private non-profits is available. To access the advance, you first apply for the EIDL and then request the advance. The advance does not need to be repaid under any circumstance and may be used to keep employees on the payroll, pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations including debts, rent and mortgage payments.
ELIGIBILITY
In addition to entities that are already eligible for SBA disaster loans (small businesses, private non-profits, and small agriculture cooperatives), eligibility is temporarily expanded to include:
-
Business entities with 500 or fewer employees
-
Sole proprietorships, with or without employees
-
Independent contractors
-
Private non-profits of any size
Additionally, you must have been in business since January 31, 2020. Expanded eligibility criteria and the emergency grants are only available between January 31, 2020 and December 31, 2020.
If you apply for an EIDL and the grant, you can still apply for the Paycheck Protection Program. HOWEVER, the amount forgiven under a Paycheck Protection loan will be decreased by the $10,000 grant.