Given the current pandemic, social distancing measures and quarantine lockdowns are in order. To risk the further spread of infection, consumers are forced to stay at home, while nonessential businesses are ordered to temporarily close down. Businesses falling under commerce are not considered essential services, so the closure of these operations have the potential to affect small businesses negatively in terms of finance.
You may be one of the small business owners worrying about the state of not only your lack of resources but your employees’ payroll. Fortunately, the newly passed CARES Act offers several benefits for you, as well as your employees during the coronavirus pandemic.
What is the CARES Act?
The CARES Act, which stands for Coronavirus Aid, Relief, and Economic Security Act, is a stimulus package designed specifically for individuals and businesses directly affected by the pandemic, which serves as an economic relief. $2 trillion is allocated to those covered by the Act, and $377 billion of the funds will go to small business owners with 500 or fewer employees.
What benefits does the CARES Act offer small businesses?
From the $2 trillion budget, the CARES Act provides $10 billion for Emergency Economic Injury Grants. This grant can be as much as $10,000 for each small business owner, which is enough to cover operating costs.
The Small Business Debt Relief Program is also offered, where $17 billion is available for six months of payments to help small business owners pay current non-disaster Small Business Administration loans.
Here are more benefits that small businesses can receive through the program:
- The Paycheck Protection Program: This allows small businesses with existing loans to pay up to eight weeks of employee payroll services costs, which includes all benefits. The funds for this program can also be used to pay interests, specifically on rent, utilities, and mortgage payments.
- Employee Retention Credit: Launched by the Treasury Department and the Internal Revenue Service, this program allows small businesses to keep their employees on their payroll. At a time where the unemployment rate is high, the program seeks to stop the further increase.
- Expanded Unemployment Insurance: On top of what state unemployment programs pay, the unemployment insurance has been expanded by 13 weeks. This also includes a four-month $600 benefits enchantments. This program covers freelancers, gig workers (Uber drivers), and even furloughed employees.
What does the CARES Act offer employees?
The most beneficial program offered by CARES act is the expanded unemployment insurance. Originally only running from 26 weeks, it has now been expanded to 39 weeks. An additional $600 payment will be added on top of the weekly benefit amount eligible employees receive. Moreover, Americans will also be able to receive one-time stimulus checks of $1,200 per adult and $500 per child.
How do small business owners apply for the CARES Act benefits?
Eligible small business owners can apply for the CARES Act through the Paycheck Prevention Program, which was launched last April 3. Any application shall undergo through an existing Small Business Administration, which can be the following:
- A federally insured depository institution
- A federally insured credit union
- Farm Credit System institution
For more information on loans and grants applications for the CARES Act, visit the Small Business Administration’s portal here.
What this means for small businesses
It is difficult to navigate through the new normal—your business may be suffering unimaginable losses, and you may be juggling all possible ways to support your employees through a difficult time. Although the end remains to be seen, getting help is still possible. Through the CARES Act, your small business may just see the pandemic through!
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