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.
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.
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.
The coronavirus stimulus loans will be available to businesses that have 500 or fewer employees.
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.
Loans up to $10 million will be granted based on how much the company has paid its employees between January 1 and February 29.
The interest rate will be 4%, and the bill provides for an expedited origination process.
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.
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.
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.
Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.