What Does the CARES Act Mean for my Small Business? Answering your Questions with Congressman Paul Mitchell
What is the CARES Act? • The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the third Coronavirus relief package passed by Congress and enacted by the President. • The goal of this legislation is to provide direct relief to individuals, families, and businesses who have been impacted by the Coronavirus Pandemic. 2
CARES Act Topline Summary • Provides direct financial assistance to middle-class Americans with a one time tax rebate of up to $1,200 for individuals/$2,400 for couples/$500 per child. • Creates a new loan program and makes additional resources available for small businesses so they can keep doors open and pay employees. • Stabilizes key national industries that will protect jobs and functions important to America’s economy. 3
CARES Act Topline Summary Cont. • Includes historic support for health care workers and hospitals who are fighting the virus. • Expands unemployment insurance to 4 months & makes it available for self-employed and independent contractors. • Directs funding to state and local governments so they can continue to combat the crisis. 4
What does the CARES Act mean for my Small Business? • Creates a new loan product within the SBA’s 7(a) Loan Program called the Paycheck Protection Program. • Provides grants and funding to offer training, counseling, and assistance to small businesses affected by COVID-19. • Expedites access to capital for small businesses who have applied for a small business Economic Injury Disaster Loan. 5
Paycheck Protection Program Loans • The program would provide cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. • If employers maintain their payroll, the loans would be forgiven, which would help workers remain employed, as well as help affected small businesses and our economy snap-back quicker after the crisis. • Small businesses and other eligible entities will be able to apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through June 30, 2020. 6
Small Business Debt Relief 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, for six months. • This relief will also be available to new borrowers who take out loans within six months of the President signing the bill into law. 7
Economic Injury Disaster Loans & Emergency Economic Injury Grants • These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL). • To access the advance, you 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. • Pay for sick leave. • Meet increased production costs due to supply chain disruptions. • Pay business obligations, including debts, rent and mortgage payments. 8
Small Business Tax Provisions • Employee Retention Credit for Employers Subject to Closure or Experiencing Economic Hardship • This provision would provide a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis. • The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings. The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis. • The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through December 31, 2020. 9
Small Business Tax Provisions • Delay of Payment of Employer Payroll Taxes • This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022. • Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate), and half of SECA tax liability. • Deferral is not provided to employers receiving assistance through the Paycheck Protection Program. 10
Small Business Counseling • If you, like many small business owners, need a business counselor to help guide you through this uncertain time, you can turn to your local Small Business Development Center (SBDC), Women’s Business Center (WBC), or SCORE mentorship chapter. • These resource partners, and the associations that represent them, will receive additional funds to expand their reach and better support small business owners with counseling and up-to-date information regarding COVID-19. 11
CARES Small Business Recap • Paycheck Protection Program Loans • Small Business Debt Relief Program • Economic Injury Disaster Loans & Emergency Economic Injury Grants • Small Business Tax Provisions • Small Business Counseling 12
Businesses with 500+ Employees • The CARES ACT allocates $500 billion to what is called an Exchange Stabilization Fund (ESF) - an emergency reserve fund that provides the Treasury Secretary with the authority to distribute emergency funding. • Up to $454 billion can fund a Federal Reserve facility for distressed businesses. • Allows the Treasury Secretary to provide loans and loan guarantees to businesses of all sizes. • Allows the Treasury to finance Fed facilities that will provide liquidity to shore up business lending, including through a special banked-base program for companies that employ 500-10,00 employees. 13
Families First Coronavirus Response Act: Paid Sick Leave • The Families First Coronavirus Response Act established an emergency paid leave program. • The Federal government will provide employers with a refundable payroll tax credit of 100% of the required wages, but capped at $200 per day ($511 per day in the case of employees that are home sick from COVID-19 or complying with a quarantine). • The mandate is optional for businesses under 50 employees. • These provisions ensure that no business has a liability larger than the tax credit it receives, and also provides the secretary with the ability to advance resources to small businesses. 14
Resources • Small Business Administration Resources : https://www.sba.gov/page/coronavirus-covid-19-small-business- guidance-loan-resources • Find Local Assistance : https://www.sba.gov/local-assistance/find/ • Small Business Disaster Loan Assistance : https://disasterloan.sba.gov/ela/ • FEMA How to Help : https://www.fema.gov/coronavirus/how-to-help • Paid Sick Leave Info for Employers: https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave 15
Contact Michigan SBA Office 313-226-6075 Rep. Paul Mitchell’s Office Washington, DC: 202-225-2106 Shelby Township, MI: 586-997-5010 16
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