CARES Act Small Business FAQ
The CARES Act provides historic economic relief as our nation fights the COVID-19 outbreak. Through new loan programs, like Paycheck Protection Plan, and protections for existing loans, like the Small Debt Relief Program, resources are available for small businesses to navigate this public health emergency.
The following is a resource for small business owners to find the best strategy to meet their needs.
- Who qualifies as a small business?
- What loans are available?
- What are the differences between the programs?
- How can I apply?
- What can I do about existing SBA loans?
Generally, any business with less than 500 employees.
This includes self-employed individuals, independent contractors, sole proprietors, 501(c)(3) nonprofits, 501(c)(19) veterans organizations, and tribal businesses.
The Small Business Administration (SBA) also has industry-based exceptions. To learn if your business qualifies, have your organization’s 6-digit North American Industry Classification System (NAICS) number and visit this table.
To find your NAICS code use the 2017 keyword search engine at https://www.census.gov/eos/www/naics/faqs/faqs.html
For long-term payroll management, the Paycheck Protection Plan (PPP) is the newly created program in response to COVID-19. PPP loans cover 2.5x monthly payroll costs and can be forgiven if employers maintain their payroll for 8 weeks.
For smaller amounts of immediate relief, Economic Disaster Injury Loans (EIDL) will cover short-term expenses. After applying for an EIDL, you can request an emergency advance of $10,000 within three days that does not need to be repaid.
You can apply for both an Economic Disaster Injury Loan and the Payment Protection Plan. It is possible to roll the EDIL into the terms of a PPP loan and any cash advance will be included in determining loan forgiveness.
Paycheck Protection Plan
- $350 billion available
- Amount determined by formula calculating 2.5x monthly payroll costs, employees making over $100,000, and dates of operation
- Capped at $10 million
- Used towards employee compensation and benefits, rent, utilities, and unmet debt obligations
- 100% federally guaranteed
- No requirements on credit, personal guarantees, or collateral in order to expedite approval
- Defers payment of principal, interest, and fees for at least 6 months
- Loan can be forgiven if payroll is maintained for 8 weeks
- Available through June 30, 2020
Economic Injury Disaster Loan
- $10 billion available
- Amount determined by emergency impact and need
- Capped at $2 million
- Used towards immediate emergency expenses including but not limited to payroll, sick leave, and increased production costs
- Interest rates are 3.75% for businesses and 2.75% for nonprofits
- One million small businesses currently qualify
- Available through December 31, 2020
Paycheck Protection Plan loans will be available at any lender, federally insured depository institution, or federally insured credit union currently approved by the SBA, with more to be approved by the Department of Treasury. Check first with your local lender to see if they are participating.
Use the application linked here to begin gathering your qualifying information: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Application-3-30-2020-v3.pdf
Economic Disaster Injury Loans are currently available through https://covid19relief.sba.gov/#
For managing existing SBA loans, the Small Business Debt Relief Program will defer all loan payments for six months – including principal, interest, and fees – on all SBA programs. This includes 7(a), 504, or microloan programs and will extend to any new borrowers of these programs. Contact your existing SBA lender for more information.
If you have questions or need assistance please call my Washington, D.C. office at (202)-225-7919 and follow instructions to be connected to my staff or send an email to NJ8inquiries@mail.house.gov.