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Lifeline for America’s Small Businesses

America’s small businesses (< 500 employees) were tossed a lifeline last Saturday. Through a forgivable loan, the Care Act pays for labor expenses for small businesses from March 1 to June 30, 2020. Businesses can also include their rent and other indebtedness cost during this period in the loan, but this amount is not forgivable.

But, you have to maintain the same employment level as before March 1st. That means, if you laid off people in March, you need to rehire them (or the equivalent number of employees), so that the federal government can pay for your payroll through June 30th.

Businesses with tipped employees can pay their employees their base pay plus missed tips and get reimbursed for this in their forgivable loan.

To calculate your labor expenses covered by the loan, you can only include wages reported on state and federal payroll reports – i.e. payments to independent contractors and draws for sole proprietors are not counted.

The loans will be processed through your local banks offering SBA loans. The SBA has 30 days to ramp up for this, so they may not process your loans immediately. However, once they start, they are required to give an answer within 15 days of filing a loan request.

Loan documentation is expected to include:

· Federal and state employment tax forms for the past year

· Documentation/financial statements showing your rent and indebtedness (to be included in the loan, the debt must have been incurred a year ago or earlier).

For more details, click here.

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