In these uncertain economic times, you may be wondering how to make ends meet for your business while complying with the COVID-19 quarantine measures.
On March 25, 2020 the United States Congress passed the $2.2 trillion CARES Act. The primary purpose of this Act is to provide economic relief to business owners who have suffered financial loss as a result of COVID-19. As a part of this stimulus package, the SBA Economic Injury Disaster Loan Program (EIDL) is offering up to $2 million in loans to alleviate mortgage and rent payments, payroll expenses, and other financial obligations. Loans through the EIDL will have long-term payments stretching up to a maximum of 30 years, and will carry an interest rate of 3.75%. There is no cost to apply, and no obligation to accept the loan if your business qualifies.
In order to qualify for a EIDL loan, a business must: (1) have a physical location in an area where a disaster has been declared; (2) have sustained a demonstrable negative impact to working capital; and (3) meet a series of SBA requirements pertaining to the size and type of business transacted.
In addition to the SBA EIDL loan, Congress has enacted what is known as a 7(a) loan. A 7(a) loan can be issued for up to $10 million for a business, or a multiple of 2.5 of its average total monthly payments for payroll (this includes all benefits paid to employees as well as sick and medical leave). This greatly expands what has typically been offered through the SBA EIDL loans, and hopes to alleviate some of the substantial burdens that business owners are experiencing.
Our team at the Tarantino Law Firm is diligently working with our clients to provide legal services, and to help area small businesses apply and receive the assistance needed. As well as providing essential information regarding employer paid leave requirements.