The CARES Act, SBA Loans and How They Will Aid Businesses and Independent Contractors

The CARES Act, passed at the end of March 2020, contains over $300 billion in relief for American workers and small businesses all over the nation. “CARES” stands for Coronavirus Aid, Relief, and Economic Security. 

It was announced this week that this money has already been exhausted, but Congress is considering a second and maybe even a third package to continue to support our country’s businesses. It is currently unknown when another package will be presented or what it will look like, but you are still encouraged to apply. 

The goal of the CARES Act is to provide relief options to those who are facing unprecedented economic hardship due to the coronavirus (COVID-19) outbreak. Since being implemented, there are many new resources available for small businesses and independent contractors. If you are looking for money to cover the costs of retaining employees or funds to cover your business ASAP, please read the resourceful information below.

 

Looking for extra funds to help retain your employees?

 

The Paycheck Protection Program, or PPP, was approved to fund the prevention of job loss and small business failure due to the pandemic for businesses and entities that have been in operation since February 15, 2020. The PPP also provides small businesses easier access in obtaining SBA guaranteed (7)a loans. 

The funds can be used for payroll costs, group health care benefits, employee salaries and commissions, payments of interest on any mortgage obligation, rent, utilities, and interest on any other debt obligations that were incurred before the covered period. 

In order to qualify for the PPP loan, businesses must fall into one of the following categories:

  •  Private businesses, 501(c)(3) non-profit organizations,  501(c)(19) veterans organizations, or Tribal businesses that have fewer than 500 employees, or the applicable size standard in number of employees for the North American Industry Classification System (NAICS) industry as provided by SBA, if higher. 
  • Individuals who operate a sole proprietorship or as an independent contractor and eligible self-employed individuals. 
  • Any business that employs not more than 500 employees per physical location of the business and that is assigned a NAICS code beginning with 72, for which the affiliation rules are waived. 
  • Affiliation rules are also waived for any business operating as a franchise that is assigned a franchise identifier code by the Administration, and a company that receives funding through a Small Business Investment Company.

 

For more information on eligible costs, loan terms, interest rates, and PPP loan forgiveness, visit the SBA website’s Paycheck Protection Program

 

Need funds ASAP to help keep your business afloat?

 

The Economic Injury Disaster Loans and Emergency Economic Injury Grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within a potential of three days after applying for an SBA Economic Injury Disaster Loan (EIDL). 

To access the advance, you must first apply for and request an EIDL. The advance may does not need to be repaid 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. 

To learn more about how long the grants are available is you can still apply for a PPP loan, and to contact an SBA resource partner for guidance through this process, click here

 

Interested in exploring more resources?

 

The CARES Act is also providing relief for payments on current or potential SBA loans and free counseling to help you navigate this uncertain time. You can find information for both of these relief options on pages 6 and 9 of The Small Business Owner’s Guide to the CARES Act. We will update our blog as more information regarding new resources and proposed packages becomes available.

 

Angela Reddock-Wright is an employment law attorney, mediator, arbitrator and workplace/Title IX investigator in Los Angeles, CA. Known as the “Workplace Guru,” Angela is an influencer and leading authority on employment, workplace/HR, Title IX, hazing and bullying issues. She is a regular legal and media commentator and analyst and has appeared on and provided commentary with such media outlets as Court TV, CNN, ABC, CBS, KTLA, KPCC Airtalk-89.3, the New York Times, the Washington Post, the LA Times, People Magazine, and Essence Magazine.

For more information regarding tips on how to manage and deal with coronavirus in the workplace, connect with Angela on LinkedIn for new updates, or contact her here

 

This communication is not legal advice. It is educational only. For legal advice, consult with an experienced employment law attorney in your state or city.

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