Every news outlet has been jam-packed with updates on the recently passed $2 trillion coronavirus stimulus plan (CARES Act). Promises of checks for everyone, extended tax deadlines, tax-free student loans, small business emergency grants, and more proliferate across the internet.
And with those promises come questions, especially for small business owners. We’ve heard questions all week—and have had our fair share, too—and (fortunately) we’ve found answers. Below, we’re uncovering answers to 8 of the most common questions about the CARES Act.
The CARES Act is a $2+ trillion federal economic stimulus plan intended to boost the US economy by:
In short, it’s monetary assistance for everyone in the country financially impacted by the novel COVID-19 pandemic.
CARES stands for “Coronavirus Aid, Relief, and Economic Security.” It’s a mouthful, and that’s why everyone is just calling it the CARES Act.
You could probably argue it’s the government acknowledging they care, and you wouldn’t be wrong.
In short, the CARES Act earmarks more than $367 billion (with a “b”) for small businesses that are fighting to survive amid closures and social-distancing executive orders. Here are all the different ways the CARES Act is supporting small businesses:
For small business benefits, the eligibility requirements are simple. You’ll need:
The SBA plans to review and approve all applications 2–3 weeks after submission. If approved, you should receive an initial $25,000 disbursement within 5 days. Then, you’ll receive the rest of the loan incrementally over a determined schedule. So plan on close to 30 days from application to funding.
You should go ahead and apply anyway. There’s no fee for applying, and you won’t be penalized if you’re approved and reject the loan. The economy is rapidly changing, and it’s hard to know what’s around the corner. It’s not a bad idea to go ahead and create a robust backup plan—just in case.
Nobody thinks the CARES Act is going to magically fix everything, but supporters of the bill are hopeful it will at least help.
Doubters argue that it’s not enough for industries hit hardest by mandatory shutdowns and extreme social distancing laws. Also, unlike your typical SBA loan (which is funded from bank loans), capital from federal COVID-19 small business loans is coming straight from the US treasury. With $350+ billion to allocate, people question the SBA’s ability to review and process loans in an efficient manner.
Time is money (and survival) for small businesses. And the SBA website’s frequent crashes suggest the administration might not be ready to deal with the expected applicant volume. Yet the SBA seems determined to provide quick turnaround times and grants up to $10,000 within 3 days.
It’s a lofty goal, and only time will tell how it will all play out.
Money for you, money for me, money for everyone—but where is it all coming from? Good question.
Usually, when the government wants to pay for a bill, it adds dollars to bank accounts while offsetting the spending with taxes. But since the whole point of providing cash relief to Americans is to, well, provide relief, the government isn’t going to increase taxes to pay for it.
Instead, Congress is essentially just creating cash. But what about inflation, you ask? Well, that’s another good question that this article does a good job of answering.
Have a question we didn’t cover? Need help applying for a COVID-19 small business loan? Our team’s got you covered. Give us a call at (855) 853-6346, and we’ll do everything we can to answer your questions and set your business up for success.
We’re all in this together. Keep calm and small business on.