If you’re like us, you’ve been inundated with Coronavirus news, but sometimes important nuggets can be lost in the deluge of information.
In case you’re not aware, the federal government has passed a $2,000,000,000,000 ($2 TRILLION) support package intended to address the monumental economic impact of historic nationwide shelter-in-place orders. The CARES Act includes $560 billion of support to individuals, almost $500 billion to local governments, $500 billion to large corporations and $377 billion to small businesses.
While the support to individuals is necessary and will no doubt be meaningful for your employees, the $377 billion for small business will most impact your business. The senate published a short, but useful guide to the CARES act for small business, which can be downloaded here.
Many small businesses will take advantage of the Paycheck Protection Program, which provides forgivable loans (free money!!) to businesses to cover two months of employee wages plus a few other items. Our banker (BBVA USA) said that it’s first-come first served, and there definitely won’t be enough money for everyone, so consider and act quickly if you’re interested.
It seems like an easy decision:
- You get 2.5x Monthly Payroll cost
- It is forgivable if used for payroll cost, mortgage interest, rent obligation and utility payment
- You apply through a current lender (I.e. you need a business account at the lender to which you’re applying)
- Can be used in combination with other SBA, EIDL, etc as long as you’re using one loan per purpose
Basically, it’s free money for the purpose of addressing the impact of shutdowns on your business and your staff. It allows you to re-hire those that have been furloughed and still get the full amount.
There are other loans and programs available, but you can’t use more than one program for a particular purpose (no double dipping!). If you have an SBA loan, the government will cover it for six months – principal, interest, fees and all. Economic Injury Disaster Loans are available as well. They provide up to $2 million low interest loans to small businesses for any expenses that could have been met had the shutdown not happened.
To get the details on any of these programs, contact your banker. Some banks are not participating, but most are. If you are an existing Extraco Bank or Central National Bank customer, they are certainly participating, as are all of the national banks.
I sincerely hope that your business hasn’t been significantly impacted by the shutdown, but if it has, perhaps you can take advantage of the assistance available.
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