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CARES Act Loans for Small Businesses

Navigating CARES Act Loans for Small Businesses

Signed into law March 27, the Coronavirus Aid, Relief and Economic Security (CARES) Act includes nearly $350 billion in federal assistance through a small business loan program. Offered by the Small Business Administration (SBA), the Paycheck Protection Program (PPP) aims to assist businesses amid the effects of COVID-19.

Update: Following an extension, small businesses that have been adversely affected by COVID-19 can apply for Paycheck Protection Program loans until Aug. 8.

“The program is designed to get cash in the hands of suffering small businesses quickly, with less red tape and fewer guardrails than the SBA’s existing loan programs. It is designed to incentivize business owners to keep employees on payroll by offering them loan forgiveness,” according to The Washington Post.

About the Paycheck Protection Program

What is PPP?

According to the SBA, PPP is “a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.” View the SBA’s complete guidance on PPP.

This loan has a maturity of 2 years and an interest rate of .5%, the SBA states.

The program is separate from existing federal loans, including disaster relief loans from the SBA.

Who can apply?

Small businesses with less than 500 employees, including sole proprietorships, independent contractors and self-employed people are eligible. Additionally, private nonprofit organization and 501(c)(19) veterans organizations are eligible.

Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries.

How can businesses apply?

“Small businesses can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program,” according to the SBA.

Lenders may begin processing loan applications as soon as April 3, 2020.

Details on Loan Forgiveness

Loans provided through PPP will be forgiven “if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest or utilities,” the SBA states.

“Due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll,” the administration states.

“Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease,” according to the administration.

Important Dates

The Paycheck Protection Program (PPP) will be available through June 30, 2020. Businesses can begin applying Friday, April 3, 2020.

The U.S. Department of the Treasury has issued guidance on PPP for borrowers and lenders. You can download a PPP application form through the Treasury’s website.

Resources to Guide Your Business

In an effort to help independent home improvement retailers navigate the process, Hardware Retailing has compiled helpful resources from the SBA and other sources.

SBA Guide to the Paycheck Protection Program (PPP)

Get a complete overview of the Paycheck Protection Program from the SBA.

Simple Overview of the CARES Act

Learn what the CARES Act means for your small business with this downloadable resource from the U.S. Chamber of Commerce.

Castle Wealth Advisors Overview of the CARES Act

Certified financial planner Gary Pittsford offers a thorough analysis of what the CARES Act means for small business owners.

Paycheck Protection Program (PPP) Worksheet

Download an Excel spreadsheet to plan how the Paycheck Protection Program will affect your bottom line.

Paycheck Protection Program (PPP) Application Form

Begin the process for your business to receive financial assistance through the Paycheck Protection Program with a form provided by the U.S. Treasury Department.

Estimate Paycheck Protection Program (PPP) Loan Amount and Forgiveness

Use this Excel spreadsheet to calculate how PPP will affect your business.

Protect Your Business

Hardware Retailing is committed to helping independent home improvement businesses during COVID-19. For more news and resources, visit the dedicated COVID-19 page.

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