It seems like everywhere you look, there’s no shortage of information (and misinformation) online about the CARES Act. For most people, the main question is: Does the CARES Act impact me, and if so, how? Event professionals in particular have faced some confusion when it comes to figuring out whether they’ll receive coronavirus aid or relief- and if so, how much they’ll get. Some event planners are employed by larger corporations or small businesses; others work as independent freelancers, and still more own small event businesses that are suffering in the absence of this massive economic shutdown.
That’s why we want to break it down for you. As the social distancing order extends further than was initially projected, awareness is paramount to the survival of businesses. We are dedicated to continuously bringing you new information on available resources and how to best use them. In this article, we’ll specifically discuss the CARES Act- and how you can potentially use it to keep your business alive and well while the world is trying to recover from this devastating illness. We’ll define the CARES Act, help you figure out if you are eligible, and guide you through the process of applying. In these uncertain times, the time-honored adage “knowledge is power” rings truer than ever. Here’s what you need to know now:
What is the CARES Act, and What Does It Mean For Small Businesses?
The CARES Act (or the Coronavirus Aid, Relief, and Economic Security Act) is an $2 trillion economic relief package that provides economic assistance for American workers, industries, and small businesses. The CARES Act works to protect small businesses with the Paycheck Protection Program (PPP).
You may be thinking, “That sounds good, but what does the PPP actually do?” Essentially, it provides loans to small businesses and nonprofits to help them keep their businesses afloat during the pandemic. Loans can be used to keep employees on payroll, covering salaries up to $100,000 per year as well as hourly wages and cash tips. PPP loans can also be used to pay for employees’ paid sick leave, medical leave, and health insurance premiums. They also cover rent payments, leases, interest payments on mortgages, and costs related to utilities.
If employees maintain their payroll, the PPL loan would be automatically forgiven. Forgiveness is also provided for up to 8 weeks of payroll depending on employee salary and retention amounts. There are no SBA fees hidden in the small print of PP loans under the CARES Act. All loans are deferred for at least 6 months, with some deferred up to one year.
The CARES Act’s PPP is unique from previous economic relief packages issued in the aftermath of disasters because it benefits the self-employed in unprecedented ways. The PPP provides federally guaranteed loans to small businesses with less than 500 employees per physical location; this extends to self-employed individuals, sole proprietors, and independent contractors.
We all know that freelancers are usually bypassed by unemployment insurance. Generally speaking, in the best case scenario, they receive partial eligibility. Fortunately, the CARES Act provides freelancers an additional $600 per week in unemployment.
I feel the need to inject a disclaimer at this point. In no way are we implying that the CARES Act is a solution to the devastation that small businesses and the industry as a whole are suffering. In many ways it will be inadequate, and that fact deserves recognition, as do all the hard-working event professionals who face great losses during this unprecedented crisis. We are all in this together, and our goal is to give you the facts and help you get the most out of the CARES Act.
You should know that that stimulus package offers small business owners and self-employed individuals a $10,000 advance on an Emergency Economic Injury Disaster Loan (EIDL). Small businesses and the self-employed can receive up to $200,000 in loans. And even if the borrower doesn’t qualify for an SBA loan (we’ll talk about those in a minute), EIDL loans do not have to be paid back.
You don’t have to submit a tax return to be eligible for EIDL loans, but eligibility is evaluated based on credit score. If you are approved, the SBA will provide an advance payment within three days of your completed application.
Are You Eligible?
Here’s who is eligible for the PPL loan: Small businesses with 500 or fewer employees per physical location, including self-employed individuals, sole proprietors, independent contractors, nonprofits, veterans’ and tribal organizations are eligible for SBA (Small Businesses Administration) loans under the CARES Act. All eligible businesses must have legally been in operation since Feb. 15th, 2020.Unlike previous disaster relief bills, the CARES Act does NOT require businesses to have been operating for at least one year prior to applying for loans.
Since the definition of “small business” is different for every industry, you’ll need to check out the size standard for your business at www.sba.gov. Size standards are determined by the average annual receipts or the average number of employees. The website will help you calculate your size standard based on these factors. But note that any business with 500 or less employees per physical location that is assigned a NAICS code beginning with 72, is eligible despite any affiliation rules. Affiliation rules are also waived for any business operating as a franchise that has been given a franchise identifier code by the Administration. Also, if your business receives funding via a Small Business Investment Company, affiliation rules are waived for you.
Are You Eligible for the Small Business Debt Relief Program?
If your business is in debt due to the coronavirus outbreak, you may be eligible for the Small Business Debt Relief Program. This program essentially provides immediate relief to small businesses with SBA loans that are non-disaster, such as 504 ad microloans. Under this part of the CARES Act, the SBA will cover all loan payments on these loans for 6 months. This includes principal, interest, and fees. Relief under the Small Business Debt Relief is also available for borrowers who take out loans within 6 months of the bill being signed.
So, in review, small businesses may borrow 250 percent of their average monthly payroll costs. This total amount can be up to $10 million. Approximately, this amount is meant to cover 8 weeks of payroll and additional expenses related to debt payment. This 8 week period applies to any time frame within Feb. 15h, 2020, and June 30th, 2020.
How Can You Apply?
You can apply online for PPP loans at all lending institutions that have been approved to participate in the CARES Act. This includes many corporate institutions as well as community banks. If you’re unsure of your eligibility, need help with your application, or are interested in finding other participating lenders locally, start by calling your bank.
Hopefully, this article gave you the CARES Act facts you need and the resources to find more information. Our mission during this time is to provide you with as much guidance as possible as we all navigate this crisis. We’ll continue to give you innovative articles that help you use your creativity in tangible ways to progress through the pandemic. But right now we need as much knowledge.