CARES Act Update: What Does It Mean for You?
Second time’s the charm they say, and with the second round of funding now available for all small businesses.
Second time’s the charm they say, and with the second round of funding now available for all small businesses, the experience should be different from the first. On Friday April 24, Congress approved an addition to the original budget approved through the CARES Act aimed at helping the small business community, an important pillar to the national economy. This new addition is of $484 billion should start to positively impact business owners with their PPP and EIDL applications. Some things to consider with this:
- Communication with your banker is key. Follow up with the bank to check where your application is at, and to learn where you stand. Ask where you are in line to receive your funding.
- You can always apply elsewhere. Although many banks prefer to receive applications from their own clientele, there are others that will happily take your application. With smaller banks, the line to receive funding could be shorter.
- It is important to understand that if you wish to receive loan forgiveness on the PPP loan, you must have used 75% of the funds on payroll expenses.
- Up to 25% of the loan can be used on other loan forgiveness eligible expenses, such as rent and utilities.
- Save your receipts! When you are ready to seek loan forgiveness you must provide documentation to support your case. Copies of your rent payment, paid utility bill, 1099s, 941s, cashed checks, etc., are all good to submit.
- A key date to remember is eight (8) weeks from the origination date. This date will be when you become eligible to apply for loan forgiveness.
- Whatever amount is not forgiven will become a regular loan.
- You now have a PPP loan, what does that mean? Well, the loan will have a 1% interest rate and a two-year term for repayment. Keep that in mind as you make your calculations.
This second round of funding will also support EIDL and $10K* grant applications. The EIDL and $10K funding has gone through many changes since it first began. The EIDL application is now on a 3.0 version which, fortunately for many, has become a more streamlines process, definitely more user friendly. The original $10K grant, has now changed to a $1K grant per employee, with a max of $10K per business.
It is important to note that the thinking in Washington is to have separate package or deal for medium sized businesses and thus ensure that main street America receives this much needed assistance in a timely manner. They are, after all, the backbone of our economy.
Related content:
The Latest on the Small Business Owner’s Guide to the CARES Act
