Update: A new $484 billion coronavirus relief package was passed on April 24, 2020. Among other measures, the package provides new funding for forgivable Paycheck Protection Program loans and SBA Disaster Relief loans.
To help keep your team intact during this especially challenging time, the Small Business Administration is offering companies with 500 or fewer employees government-backed loans that can be used to pay costs like payroll, rent, utilities and other operating expenses.
It’s part of the $2 trillion economic stimulus package provided by the recently-passed Coronavirus Aid, Relief and Economic Security (CARES) Act.
What is it?
A Paycheck Protection Program loan can help you hold onto employees and stay in business.
1% interest rate
Covers expenses for Feb. 15 – June 30, 2020
Provides 2.5x your monthly payroll costs (up to $10 million)
Payments may be deferred for six months
The loan may be forgiven if you keep all employees on the payroll for eight weeks and use the loan for payroll, rent, mortgage interest or utilities. You may qualify for partial forgiveness if you:
Avoid reducing full-time hours or reducing wages by more than 25%
Hire back the same number of employees if you have to lay off people
Covered employees include self-employed workers, independent contractors and sole proprietors.
How do I apply?
You can fill out an application here if a Paycheck Protection Program loan sounds right for you. Then submit it to a Small Business Association Participating Lender. Click here to find eligible lenders in your area.
IMPORTANT NOTE: Unfortunately, banks have been overwhelmed by applicants. You may want to anticipate a delay when you get into the queue.
Can I also take an employee retention tax credit?
The CARES incentive package also offers two tax breaks designed to keep your team intact:
A tax credit that will refund half of what you spend on wages, up to $5,000 per employee.
A deferment of 2020 payroll taxes until 2021 and 2022. (You’ll pay half in each year.)
Unfortunately, this is a case of “no double dipping” if you take out a PPP loan. You can’t also take the tax credit or tax deferment.
How else can CARES help my employees? In addition to making a PPP loan available, these new health insurance plan changes will help people get the health care they need:
All health plans must cover coronavirus testing and related office visits without cost-sharing
Health savings accounts (HSA), health reimbursement arrangements (HRA) and flexible spending accounts (FSA) must let participants use money to purchase over-the-counter drugs as well as menstrual products
High-deductible plans must cover telemedicine services at reduced or no cost without jeopardizing HSA eligibility
Group plans must cover any preventive coronavirus measures that become available without cost sharing
If you or employees who left your company need to find new health insurance, check out these helpful resources.
As an advocate who believes in your business, we’re sharing resources and guidance that could help you out right now. Because we know you want to do everything you can to save money, we’re also here for you with free quotes that could lower your rates on business insurance (or even improve your coverage). Ask a licensed Mylo agent to review your current policy and try to beat it.
Up-to-date guidance for business owners in one place.