CARES Act Cheat Sheet

Congress authorizes second round of relief with additional funding available for small businesses under CARES Act

The boosted stimulus package allocates additional $370B for small business loans and grants to offset the economic impact of the COVID-19 pandemic.

Congress just replenished the landmark CARES Act with $370B in funding earmarked for small businesses. The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, outlines a series of measures aimed at helping small businesses that have been adversely affected by the COVID-19 pandemic. The legislation offers tax rebates, tax-filing extensions, and modified tax treatments along with business loans and emergency grants aimed at bolstering small businesses and their employees during these challenging times. This second wave of funding puts more money on the table for small businesses seeking Paycheck Protection Program loans and Economic Injury Disaster Loans.

Since the very beginning, CoverHound and CyberPolicy have been solely focused on supporting the small businesses that make up the foundation of this nation’s economy. We have put together this little cheat sheet that outlines some strategies to utilize stimulus funds available to small businesses like yours.
Low and Zero interest loan programs available to small businesses.
Funds available in this updated relief package are allocated to loans administered through the Small Business Administration (SBA).
  • Paycheck Protection Program (aka PPP) // $310 billion available

PPP loans of up to $10 million cover payroll-related expenses. These loans have a few qualifications, mostly related to employee counts and business size, offer loan forgiveness opportunities and require no personal guarantees or collateral. PPP funds will be administered by banks, credit unions, and other financial institutions (SBA 7a approved lenders).

  • Economic Injury Disaster Loan (aka EIDL) // $60 billion available

These loans can be obtained in amounts up to $2 million, with standard interest rates of 3.75% for small businesses and 2.75% for nonprofit businesses with various repayment terms for each. EIDL will be administered by the SBA itself.

An emergency advance of up to $10,000 can be obtained to cover business expenses that will ensure immediate and ongoing operations. In the event that an advance is disbursed and the application is denied, the advance does not need to be repaid.

Special Note: Come tax time, there are also payroll tax deferment and tax credits available to employers. See details in the resources section.
Repayment Terms & Loan Forgiveness
PPP Repayment  Interest rates for PPP funds have a fixed rate of 0.5%. PPP participating lenders cannot charge guarantee fees, yearly fees, prepayment penalties, or require collateral for the loan; and lenders are required to offer borrowers payment deferment of 6-12 months.

PPP Loan Forgiveness
  Small businesses that receive PPP funding to cover eligible expenses through June 30th, 2020, can apply for loan forgiveness; essentially turning the loan into a grant.

Eligible expenses for PPP loan forgiveness
  • Payroll costs 
  • Interest on mortgage 
  • Rent payments 
  • Utility payments
  • Compensatory wages for tipped employees
EIDL Repayment
EIDLs have fixed interest rates of 3.75% for for-profit businesses and 2.75% for nonprofit businesses and repayment terms that can extend up to 30 years based on your ability to repay the loan. The loan terms you can expect with EIDL look like this:
  • May extend repayment terms up to 30 years
  • Interest rate: 3.75% for for-profit businesses, 2.75% for nonprofit businesses
  • Personal guarantee/collateral: Not required for loans
EIDL Emergency Advance
An emergency advance of up to $10,000 can be requested with your EIDL application. The SBA aims to have advances distributed within three days of application submission. 

Emergency advance funds can only be used to cover expenses related to:
  • Employee paid sick leave
  • Employee retention and payroll
  • Increased operational costs related to supply chain issues
  • Rent or mortgage payments
In the event that an advance is disbursed, and the application is denied, the advance does not need to be repaid.
Who is eligible for a loan under the CARES Act?
  • PPP loans are available to the following types of businesses:
  1. Small businesses with fewer than 500 employees.
  2. Select types of businesses with fewer than 1,500 employees.
  3. 501(c)(3) non-profits with fewer than 500 workers.
  4. Some 501(c)(19) veteran organizations.
  5. Self-employed workers, sole proprietors, and freelance or gig economy workers.
  • EIDL funds are available to the following businesses with 500 or fewer employees:
  1. Sole proprietorships, with or without employees
  2. Independent contractors
  3. Cooperatives and employee owned businesses
  4. Tribal small businesses
  5. Small agricultural cooperatives
What should you do?
Apply for PPP or EIDL, or both, ASAP! Lenders are accepting applications on a first-come, first-served basis. It is important to note that neither the FED nor lenders maintained a backlog of applicants from the first application period. If you submitted an application after the funds were exhausted or your application was denied, you will need to reapply.
  • PPP is the obvious first step. The PPP loan approval process and disbursements are being expedited and applicants can expect a response within a few days of submission. Every company should apply for PPP funds if they qualify. Please see  The Small Business Owner’s Guide to the CARES Act for more information regarding qualifications.
  • Strongly consider applying for EIDL, but make your decision quickly. Applications for EIDL loans will be reviewed in the order that they are received. Given the much smaller allocation ($60 billion), funds will likely be exhausted quickly.
How to apply
  • PPP - If you have an existing banking relationship with a SBA 7a lender, call them directly for instructions how to apply. Otherwise, visit the U.S. Small Business Administration’s Paycheck Protection Program for details on how to connect with a SBA 7a lender or a federally insured depository institution, federally insured credit union, or Farm Credit System institution that is participating in this program.

The documents required to apply for the Paycheck Protection Loan program include:

  • EIDL // Apply for EIDL online directly through the U.S. Small Business Administration on the EIDL Application Page.

The documents required to apply for EIDL varies depending on your specific business situation. We recommend that you compile the same documents listed in the PPP application process before you begin your EIDL application; as many of these documents will likely be the same.

Resources
Here is a shortlist of the best summary guides we’ve found to date.

Legislation // Read the Full Stimulus Bill (US Senate Loan Application Resources)

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