Small Business Highlights from the $2T Stimulus Package

Posted by SPS on Mar 30, 2020 9:59:14 AM
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CARES Act-1

On Friday, March 27, 2020, Congress passed the $2 trillion Coronavirus Aide, Relief, and Economic Security (CARES) Act. It specifically allocates $350 billion dollars to help small businesses keep people employed. This portion of the bill, known as the Paycheck Protection Program, provides 100% federally guaranteed loans to small businesses. And, if the loan is used within certain guidelines, the loan is forgivable.

We’ve created a quick overview below to help you understand the opportunity and if it might be right for your O&P clinic. As always, consult your accountant regarding the bill details and your specific situation.

What is the Paycheck Protection Program?

  • A program that incentivizes businesses to keep employees on the payroll 
  • Provides 8 weeks of cash-flow assistance
  • If used within guidelines, the loan is forgivable

Who can apply?

  • Businesses with 500 or fewer employees; sole proprietors are eligible too
  • Must have paid employee salaries and payroll taxes or contractors
  • Waives the “credit available elsewhere” test normally applied   

Who is handling them?

  • Banks, credit unions, and other lenders who partner with the SBA
  • It’s backed by an SBA guarantee

How much can I get?

  • Up to 2.5x your average monthly payroll costs

How long will it take? 

  • The loans should be available as soon as this week
  • Process will take as little as 24 hours
How can I use the proceeds?
  • For payroll costs, group healthcare benefits, insurance premiums, and interest on a mortgage or other debt incurred prior to February 15, 2020, and to make rent and utility payments
    • Note, you can re-hire workers previously laid off and not be penalized
  • Loan proceeds may not be used to prepay debt
Is there a catch? 
  • If you want the loan forgiven, it must be used for its intended purpose of payroll, mortgage, rent or utility costs
  • As long as your business maintains the average size of its workforce,
    • You will only need to pay back the interest accrued
    • Principal effectively becomes a grant
  • Otherwise, you’ll have 10 years to pay back the loan at an interest rate not to exceed 4%

For more detailed information on the Payment Protection Program, check out the following resources:

"Coronavirus Emergency Loans: Small Business Guide and Checklist" | U.S. Chamber of Commerce 

“Applying for a small business disaster loan? What to know about the COVID-19 stimulus package” | Fast Company

"CARES ACT" | Senate.gov 

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Topics: O&P Industry, Clinical Services

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