What the $2 Trillion Relief Bill Means for Small Businesses

Due to the fast-changing nature of COVID-19 programs and SBA COVID-19 programs, posts may become quickly out of date. Please check our COVID-19 section for the most up-to-date information on rates, terms, and other info for PPP loans/EIDLs. 

This afternoon, the House of Representatives passed the Coronavirus Relief Bill, the CARES Act, aimed at supporting individuals and businesses through the financial hardship wrought by the spread of COVID-19.

The CARES Act now goes to President Trump’s desk where is expected to sign the bill into law. Assuming he does, here’s what small business owners can expect from the $2 trillion relief package.

Small Business Support in the CARES Act

If you don’t want to scan the full text of the bill, here’s everything you need to know about how the historic relief package will affect small business owners. 

Key Funding for Small Businesses 

• SBA loans: The $350 billion forgivable loan program for businesses. The loans can help small businesses access much-needed working capital, stay liquid, and retain employees through these uncertain times. 
• Access to the Federal Reserve’s Credit Facilities: A portion of the $425 billion will be available to small businesses. 

Expanded Unemployment Benefits

• Expanded unemployment benefits: Sole proprietors and self-employed individuals may be eligible for unemployment under the CARES Act. 

Tax Benefits

• The Payroll Tax Credit: 50% refundable payroll tax credit for businesses, aiming to further incentivize business owners to retain workers.
• Employer-Side Social Security: Delay in employer payroll taxes for Social Security until 2021 and 2022. 
• Looser Rules for Net Operating Loss: Allows businesses to offset more in deductions. 

Cash Payments for Employees (and Maybe Small Business Owners, Too)

• $1,200 cash payments: The one-time direct payments will be made to adults making up to $75,000. Married couples who make up to $150,000 will receive $2,400, plus $500 for each child. 
• Heads of household, defined as individuals who are unmarried, paying for more than half of a household’s expenses and claiming at least one dependent will have an earning cap of $146,500.
• Individuals making over $99,000 and married couples making above $198,000 will not be eligible to receive payments. 
• Individuals with income between $75,000 and $99,000 (and married couples with income between $150,000 and $198,000) will receive reduced payments based on their income. 

What Can You Expect from the $350 billion Small Business Loan Program?

The Senate included important support for small businesses in the relief act with an expansion of the loan program through the US Small Business Administration, more commonly referred to as the SBA. 

What Size Businesses Qualify

The coronavirus stimulus loans will be available to businesses that have 500 or fewer employees. 

Who Will Give Out the Loans?

The loans will be administered by banks and other SBA lenders, which should work to speed up the process of applying for the coronavirus loans, getting approved, and receiving funds.

How Big Will the Loans Be?

Loans up to $10 million will be granted based on how much the company has paid its employees between January 1 and February 29. 

What Will the Interest Payments Be for SBA Coronavirus Loans?

The interest rate will be 4%, and the bill provides for an expedited origination process. 

Which Small Businesses Will Have Their Coronavirus Loans Forgiven?

A small business that uses its SBA loan funds for the approved purpose of the loan and maintains the average size of its full-time workforce (at the time it received the loan) may be eligible for loan forgiveness under the bill. In this case, the principal of the loan, or the amount borrowed, would be forgiven, and only the interest would need to be repaid. 

Can You Apply for an SBA Coronavirus Loan Now?

Not quite. The CARES Act still needs to be passed by the House of Representatives and signed into law by the president. Once that happens, the time it takes to roll out the new loans will be dependent on the capacity of the SBA and which lenders are approved to fund the loans. 

So the short answer is we’re still weeks to months away from small businesses seeing those funds… at best. 

What Can You Do if Your Small Business Can’t Wait?

We understand that right now is an extremely tough time for small businesses. If you can’t wait for an SBA loan, or you’ve been denied, you can see if you qualify for other forms of financing.

We’ve put together a robust list of relief resources on a national and state level to help small businesses secure the capital they need when they need it. 

While every effort is made to ensure the accuracy of information when a story is published, the coronavirus pandemic and Paycheck Protection Program (PPP) have caused details to change at a rapid pace. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the information contained in these pages. For the most up-to-date information, please visit the COVID-19 section of our website. For more information, you can call us at (855) 853-6346. Lendio is not responsible for and provides no warranty as to the accuracy of this content. Lendio does not provide legal, accounting or tax advice. The information and services Lendio provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.