What to know about the CARES Act for small businesses
Authored by The Good Trends' editor
As the Covid-19 crisis hits hard small retailers across the world, we believe our role as a wholesale company is one of support to our community of brands and retailers.
In this article, we are detailing the CARES act voted recently by the Senate as well as highlight resources that businesses can use to steer through during those tumultuous times. We will update this information as often as possible as more information becomes available.
CARES act - what does it mean for me?
The new CARES Act has appropriated $377B in funds for small businesses through two types of loans: EIDL loans (Economic Injury Disaster Loan) and PPP loans (Paycheck Protection Program). Small businesses can get both EIDL and PPP loans, as long as the loans do not pay for the same expenses.
About EIDL loans
The Economic Injury Disaster Loan (EIDL) is an emergency program offering small business loans up to $2M. It a great options you are a small business or if your business needs an extra cash line of $10k on very short notice as it also includes a grant for eligible businesses to receive a cash advance of up to $10,000 that you're not required to repay.
About PPP loans
The Paycheck Protection Program (PPP) program forgives 8 weeks of operating expenses for approved business owners who maintain their payroll through the end of June 2020. The amount of money from the loan that is spent to cover payroll, utilities, rent, or mortgage payments and associated interest can be forgiven. Any other payments can be deferred by 6 months. To be eligible for this loan, businesses need to maintain payroll until at least June 30, 2020. However businesses can correct past reductions in payroll by rehiring to receive full loan forgiveness by that dates
Both loans are available for businesses with less than 500 employees but certain restrictions apply if your business had affiliates or outside investors. Also note both loans are still pending guidance from the SBA, but there are steps to take now. We hope this informational resource helps, and encourage you to also seek personalized advice from qualified professionals (lender or financial advisor).