Aid for Farmers, Small Businesses, Non-profits, Brewers & Contractors
The CARES Act, also known as Coronavirus Aid, Relief and Economic Security Act, is a roughly $2 trillion response bill to speed relief across the American Economy in response to the COVID-19 outbreak.
This certainly sounds like a lot of money but realize that many folks have been impacted by the coronavirus pandemic and response, and millions of businesses have been applying. Urgency of action will best ensure that you get the funds you need to help out your business. Until Congress authorizes additional funding, the program pools will soon reach their limits.
Currently, the three main stimulus programs offered are the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL) and an Individual Stimulus. Particulars continue to shift, and there are likely to be several other follow up relief packages including more funding, including for the Paycheck Protection Program.
The individual stimulus check should be a boost to many right now as it is a grant. This and the emergency EIDL grant–if qualified–seem to be the easiest means of supporting and restructuring a small business at this time.
If you have a decent staff size and would like to go the route of maintaining payroll and employment, the loans are a good option as well and represent a large, and likely to be increased pool of the relief funding.
The seven main groups who are eligible for receiving aid from the CARES Act include individuals, small businesses, nonprofit organizations, big corporations, hospitals and public health, state and local governments and education. Businesses in Colorado such as restaurant owners, farmers, small retail businesses, carpenters, and independent contractors are all eligible for different types of relief funding, but an application process is required.
Paycheck Protection Program and Eligibility
Paycheck Protection Program (PPP) is a forgivable loan program for business owners to maintain payroll and employment. Eligible applicants can request up to $10 million to cover operating costs of their businesses. PPP loans can be used to cover most paycosts, rent, utilities and the interest on a mortgage.
Those who are eligible include businesses with under 500 employees, Tribal, veteran and non-profit organizations, sole proprietors, independent contractors and qualifying self-employed farmers, food truck vendors, etc.
PPP Application Process
Those who wish to apply for the PPP should certify that they are experiencing economic uncertainty and wish to maintain employment of their staff during the COVID related crisis.
“There is $350 billion allocated for the Small Business Administration to provide loans of up to $10 million per business. Any portion of that loan used to maintain payroll, keep workers on the books or pay for rent, mortgage and existing debt could be forgiven, provided workers stay employed through the end of June.”National Public Radio: What’s Inside The Senate’s $2 Trillion Coronavirus Aid Package, March 26, 2020
You will need to find a qualified lender to carry your loan, and starting with your bank or with a lender you have an established relationship with is recommended to expedite the process. The federal government is working to expand access to funding, and has recently approved some online services like PayPal to provide these loans.
The PPP is a 2-year 1% interest rate loan that can be forgiven in full so long as you follow the protocol and spend all that you are issued on appropriate costs, and that you follow the details set forth under the program.
If you want to apply for a PPP loan you can find more information and the application from the Small Business Administration.
Economic Injury Disaster Loans (EIDL)
These loans are issued up to $2 million and operate on a 3.75% interest rate for businesses and 2.75% for nonprofits. The business must have been operational January 31, 2020. There is a 30 day processing time with these loans. You can also apply for an emergency processing which can be completed in 3 days. With emergency grants, you can request up to $10,000. Note that if you do receive a EIDC, this amount will be reduced from your PPP if you request and receive one of those as well.
Employment Tax Incentives
There are also Employment Tax Incentives available to those employers who are still employing but your employees are unable to provide services. The employers can retain a refundable tax credit for 50% of each employee’s qualified wages up to $10,000. Qualified wages fall between March 31-December 31, 2020. To be eligible for these incentives, you must also defer the share of Social Security tax you are responsible for between March 27-December 31, 2020. This program is not available for those who receive PPP.
Individual $1,200 Stimulus Check
Individuals are also receiving a $1,200 stimulus check intended to help support local economies and workers, and is a grant, not a loan. It does not need to be repaid and also doesn’t have extra specifications and requirements for forgiveness like the PPP and EIDL loans.
All U.S. individuals (Citizens, Documented Migrant Workers, Green Card Holders) are eligible for a relief grant of $1,200 if you make less than $75,000 annually, while those filing jointly are eligible for a relief grant of $2,400, with $500 additional paid for each dependent child. The cutoff for eligibility of any percentage of the full relief amount is capped at $100,000 annual income for individuals and $195,000 for joint filers.
I hope this article clears a few things up about the CARES Act and that you feel supported and prepared to decide how and if you would like to utilize what it offers.
If you have not already taken our quick survey on how the coronavirus and response is impacting farm and food businesses and organizations, we would love to get your input. You can take that 10 minute survey here.
The Colorado Farm and Food Alliance works to share information, find collaborations, provide service and facilitate action to support Colorado’s amazing small businesses, farms and entrepreneurs!
Be well good people. You are so strong.
Please see page 2 for CARES Act links, information, and resources