The Coronavirus Aid, Relief, and Economic Security (CARES) Act
The federal government approved a $2 trillion coronavirus response bill intended to speed relief across the American economy. The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the third aid package from Congress and is meant to keep businesses and individuals afloat during an unprecedented freeze on our economy. Below is a summary of the CARES Act’s small business provisions and loan programs, which the Small Business Administration (SBA) is overseeing.
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. The Paycheck Protection Program provides a loan of up to $10 million and is available through June 30, 2020. This program is open until June 30, 2020 but it is advised borrowers apply as soon as possible given the loan cap on the program.
This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. Under it, SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, prior to September 27, 2020. This relief will also be available to new borrowers who take out loans prior to September 27, 2020.
The Economic Injury Disaster Loan (EIDL) provides vital economic support to small businesses to help overcome the temporary loss of revenue. Eligible businesses can receive up to a $2 million loan under this program. These loans provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by coronavirus within three days of applying for a SBA EIDL. To access the advance, you must first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to keep employees on payroll, to pay for sick leave, meet increased production costs due to supply chain disruptions, or pay business obligations, including debts, rent and mortgage payments.
Under the Families First Coronavirus Response Act (FFCRA), employers with fewer than 500 employees are eligible for refundable tax credits for the cost of providing paid sick and family leave wages to employees for COVID-19 related leave.
Local Initiatives Support Corporation (LISC) is providing 15 $5,000 grants to small businesses, to help them keep functioning and remain vital facets of their local economies through this challenging period. Congress and is meant to keep businesses and individuals afloat during an unprecedented freeze on our economy. Below is a summary of the CARES Act’s small business provisions and loan programs, which the Small Business Administration (SBA) is overseeing.
their employer has reduced hours or shut down operations due to COVID-19
their child’s school is closed and they have no other care options
California Department of Tax and Fee Administration
The California Department of Tax and Fee Administration (CDTFA) announced all small businesses have an additional three months to file returns and pay taxes administered by the department. All businesses have an extra 60 days to file refund claims or appeal a CDTFA decision to the Office of Tax Appeals. CDTFA is providing a three-month extension for a tax return or tax payment to any businesses filing a return for less than $1 million in tax.
Employment Development Department
The California Employment Development Department is offering businesses directly affected by coronavirus up to a 60-day extension to file their state payroll reports and deposit state payroll taxes without penalty or interest, upon request. When you file, you must include the impact of coronavirus in your written request for the extension. Your request must be received within 60 days from the original past-due date of the payment or return.
Disaster Relief Loan Guarantee Program
California’s Infrastructure and Economic Development Bank (IBank) is issuing loan guarantees of up to 95% of the loan through its partner Financial Development Corporations. This program will help lenders and small businesses by providing loan guarantees of up to $1 million for small business borrowers in declared disaster areas. Eligible small business applicants must be located in California with 1- 750 employees.
California IBank is offering loans from $500 to $10,000 to low wealth entrepreneurs with a business located in the declared disaster and emergency areas. This loan has a term of up to 5 years and funds can be used for start-up costs, property, machinery or equipment, inventory, and tenant improvements.
CDC Small Business Finance is offering working capital emergency loans from $20,000 to $150,000 for California businesses. These loans can be used to cover payroll, rent or mortgage, utilities, insurance and more. This loan will accrue interest for the first six months only and has a variable rate of 2.75-6%. Applicants will hear if they are approved for this loan in 48 hours.