How small businesses can receive help from the government.
It’s no surprise that businesses of all sizes have struggled throughout the pandemic. Crippling some and closing others, COVID-19 has disrupted business income and put strain on many. However, the Coronavirus Aid, Relief and Economic Security (CARES) Act has been signed into law and is designed to help American workers and small businesses. Here is what you should know about your options.
This program is designed to allow small businesses to keep workers on payroll during the pandemic. The program is for any small business (that has fewer than 500 employees), including sole proprietors, independent contractors, the self-employed, and non-profit organizations.
The loans through PPP can be in the amount of up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount – up to a $10 million cap. The loan can be used for payroll costs, the continuation of group healthcare benefits or insurance premiums, mortgage interest, rent, and utilities.
The amount that you receive in PPP will be forgiven as long as you:
- Use it only for the above-allowed expenses and use 75% of the loan amount for payroll costs
- Maintain your full-time employee headcount until June 30
- Do not decrease wages or salaries more than 25% for any employee that made less than $100,000 annualized in 2019
Typically, EIDLs are for businesses that need financial help because of a natural disaster. However, as of early March, eligibility for these loans has been extended to American companies that have been impacted by the recent pandemic.
Who is eligible for the EIDL?
- Businesses with fewer than 500 employees
- Sole proprietorships, with or without employees
- Independent contractors
- Cooperatives with fewer than 500 employees
- Nonprofit organizations
You can receive a $10,000 cash advance which does not need to be repaid under any circumstance. It may be used to keep employees on payroll, pay for sick leave, business interruptions, utilities, increased costs due to supply chain disruptions, and other payment obligations that can’t be met due to COVID-19.
While you are allowed to apply for both programs, there are some restrictions. You cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, but you can use it for payroll in March or for different workers in April.
It’s natural for business owners to feel stressed during this time, but be aware that help is out there. For the business insurance to protect your company and team, visit the Glendale professionals – Young Insurance! We are ready to get you the coverage you need today.