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The New CARES Act Is Aimed at Helping You With Worker Payroll. Here's How to Tap It

3. April 2020 16:01

By: Laurie Wolff, Certified Global Business Professional

My guess is you are struggling with the economic impact of COVID-19. Some of you have new opportunities, given the need to retrofit spaces to protect employees and possibly even to produce high need items to fight the pandemic. Some of you can still operate normally. Others are facing state-wide stay-in-place orders that are challenging operations. Still more are seeing large decreases in your booked business and are having to lay off workers and manage your cash flow.

Help is on the way. But you will have to actively engage if you want to take advantage of any of the programs. I will have blogs on several opportunities but for this one I’m focusing on one program offered through the Small Business Administration (SBA).

Part of the CARES Act (the recently passed more than $2 trillion stimulus package) is directly aimed at keeping people working in small businesses across the country. Even if all is great for you right now, pay attention and consider applying. If you qualify as a small business, you can get a government loan that becomes a grant based on maintaining your payroll. Even if times are still good, this will increase your bottom line and allow you to invest in future opportunities. If times are tough, this is a potential life line to hold out until we get through the pandemic induced shut downs.

The Paycheck Protection Program offers small businesses loans that can be forgiven if all employees are kept on payroll for eight weeks and the loan is used for payroll, rent, mortgage interest and utilities. The forgiven amount has to have at least 75 percent related to payroll expenses, but other expenses can be part of the loan package. 

Consider including expenses related to business expansion. The can include attendance at trade shows such as IWF 2020, which allows you to meet new customers or find new suppliers. I advised another small business I work with to include in his loan package funds to relocate part of his business to business sales effort - which now can’t happen in person - to an online platform. Are you getting the idea? 

 


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The loan has a maturity of two years, no payments for six months, and an interest rate of 1%. For now the window for payroll is between February 15th and June 30th so firms that have laid off workers can rehire them based on the loan and still qualify. Possibly the government may lengthen the window or increase the total funding level given future need, but for now the authorization is $350 billion. Loans can’t be for more than $10 million and most will be small.

You need to have a relationship with a banker to get this loan. Many banks that previously did not do SBA loans are seeking approval to make them for their customers. The existing SBA lenders, including the large national banks, are saying they will not be able to expand beyond their existing customers. If your bank isn’t trying to become a lender under this program, my best advice is to talk with the other banks in your town or region to find someone willing to work with you. While the loan is guaranteed by the government, the banks still have to do diligence and so the best situation is to work with a bank that already knows you and your operations.

I hope that the business owners that attended my IWF 2018 workshops on expanding their business through international trade stepped out, followed my advice, and got SBA loans because that now is advantageous. If you already have a SBA loans, it makes it easier to get this one, and the SBA has two programs open to extend payments or add extra lending to their existing clients’ loans.

To qualify as a small business, you generally have to have less than 500 employees, but you can go to SBA.gov to see if your business qualifies. Information about this and other programs is available there, but really, truly for this program you need to talk to your bank to see if they are ready to accept applications and if not, call around town to find a bank that will.

More on other opportunities in future blogs, but all the best as we try together to get through these challenging times!