The CARES Act, the first law on the coronavirus, has provided a much-needed lifeline to small businesses across the country. This funding offers greater opportunities for small business owners to receive emergency grants and forgivable loans. Companies with 500 or fewer employees can apply for both programs, and additional contingencies were also foreseen in terms of tax credits, counseling and debt relief. The stimulus package included funding both for immediate medical care during the crisis and for long-term care and prevention.
In addition to deferred payments, companies can receive payroll tax credits for offering leave benefits to workers affected by the coronavirus. The SBA will handle payments on your current loan, including principal, interest and fees, for a 6-month period as part of this program. There were no prepayment penalties and a deferral period of six months to one year was available for monthly payments. The CARES Act also put an end to foreclosures and evictions, providing much-needed relief to those in the hospitality industry. Ambulatory care centers (such as dentist offices) and other small private offices that patients may hesitate to visit in person are also being affected.
In addition to credits and financial assistance, the CARES Act includes provisions for training and assistance to small businesses. Some of the other tax provisions of the CARES Act that are useful for small businesses include the following: Businesses affected by COVID-19 can also defer their payroll tax payments for up to two years. If, within the first 24 weeks after receiving a loan, at least 60% of the funds are used to pay payroll costs and no more than 40% are used to pay mortgage interest, rent, or utilities, the remaining balance of the loan will be forgiven. The Main Street Lending Program was established by the Federal Reserve as a result of the CARES Act to help small and medium-sized businesses that were in good standing before the COVID-19 outbreak access credit. Not only did the CARES Act expand the availability of loans for small businesses, but it also established a program to help businesses with their current SBA debts (excluding disaster loans and PPP loans).African-Americans continued to have the highest business owner turnover rates: 26% of their population lost their livelihoods in May and 19% in June.
The stimulus plan provided full funding for state short-term compensation benefits for workers who remained employed but with reduced hours, and incentives for states that did not have those benefits to implement them. The CARES Act has been a lifeline for small businesses across America during this difficult time. With its provisions for emergency grants, forgivable loans, tax credits, counseling and debt relief, it has provided much needed assistance to those who need it most.