Posted on March 27 2020
Coronavirus Update 3/27/20
EMERGENCY UPDATE — Friday, March 27 —
To our clients:
The Coronavirus Aid, Relief, and Economic Security Act (CARES) was passed by the Senate yesterday and was just passed by the House. It will now go to the President who is expected to sign the bill. In addition to numerous tax incentives, a significant benefit included in the legislation is the expansion of the federally backed loan program through the Small Business Administration (SBA). Some general provisions in the Senate bill regarding the loan program are as follows:
• Available to businesses with fewer than 500 employees or which meet the applicable size standard for the particular industry, as defined by the SBA’s existing regulations.
• Sole proprietors are eligible for the program.
• Loans are limited to 250% of the business’s monthly payroll expenses, not to exceed $10 million.
• The loan advances can be used for many things including payroll, health care benefits, family medical or sick leave, interest payments on existing debt obligations and rent. Note also that advances can not be used to provide compensation benefits for “high-income” employees.
• No personal guarantees are needed to secure the loan. In addition, collateral does not need to be pledged.
• Loan payments are deferred for at least 6 months and potentially up to one year.
• The loans can be forgiven to the extent that the loan proceeds are used for eligible expenses for an eight week period beginning with the date the loan is funded.
• The Economic Injury Disaster Loan (EIDL) program has also been expanded as part of the CARES Act bill. A key element of the CARES Act provisions enables an advance of $10,000 to the loan applicant within three days of applying for the loan. If the application is denied, the $10,000 advance does not need to be repaid.
We anticipate additional guidance from the SBA regarding the application process. Note that the SBA’s website does provide significant information regarding SBA loans including determining qualified lenders.
As indicated earlier, the above items may be passed in their entirety or may be modified prior to the legislation being signed into law. Please note that we will continue to monitor this legislation and provide you with additional information as soon as the law is enacted, and we ask that you not hesitate to contact us if we can be of assistance in any way during these difficult times.
MillerSearles LLC | Certified Public Accountants | Advisors