Letter: How the CARES Act can help your small business
Congress passed the CARES Act on March 27 and the president signed it into law that afternoon. The CARES Act can provide loans that can be forgiven for small businesses to pay wages, rent and interest on debts.
Here’s a summary by Holland and Heart.
What Eagle Valley Businesses owners need to know: The way the law was written suggests that Congress would like every small business that had employees in April through June of 2019 to continue to pay those employees in 2020. If your business can maintain its employee count relative to 2019, then the loans will be forgiven. If you have a significant reduction in employees, then this program could be a lifeline, but the reduction in employees will reduce the amount that will be forgiven, in which case this is a loan.
Businesses can borrow up to 2.5 times monthly payroll expenses and can use the funds to pay wages, rent and interest on equipment or other company debts. If the business can maintain its staffing levels and receive forgiveness of the loans, the money is not taxable income to the business.
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Living in Eagle, and as a former CPA and small business owner, I know there are a lot of small businesses and employees who can benefit from this act. Any professional offices such as dentists or doctors and service firms such as auto mechanics, HVAC, construction and other services businesses who are seeing less business activity in the short term but know their business revenue will increase after the quarantine should consider applying. This law was written to try to extend payroll and reduce layoffs for all future viable businesses during the quarantine period.
Self-employed people are also eligible for these loans, or self-employed people can also file for unemployment and are eligible for the increase in unemployment of $600/week (Colorado pays 60% of wages up to a maximum $484/week) that was also included in the CARES Act. Talk to your CPA about which option may be right for you.
Check with your local bank for help securing these loans. If your bank cannot help you, it should be able to refer you to a bank that can.
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