Insight of the $2 Trillion Stimulus Package for Businesses. Liana Zavo interviewed a National Tax Expert and the CEO of Engineered Tax Services Julio Gonzalez to give us a better understanding of how small businesses can benefit from this bill. What is the Care Act for Small Businesses?
While there are a lot of detailed provisions in the bill that take into account taxes and unemployment among other topics, small business coronavirus relief certainly takes center stage of the stimulus package, with the point of the bill squarely being to keep people employed.
Being this is the largest stimulus in the history of the United States, $353 billion of the $2 trillion is focused on small businesses alone.
Given the nature of how quickly things are changing in the world today with the coronavirus pandemic, speed is the name of the game — and one in which lawmakers are trying to fuel to prevent a 30% unemployment rate.
“We have a lot of small businesses that are struggling,” Gonzalez says so how can (the government) get this into small business’ hands?
“They have taken the SBA 7(a) loan program as a shell and they have expanded it and that’s how they will get this into cash quickly.”
One thing to note is this loan from the coronavirus stimulus bill is not the same as the Disaster Loan being touted lately. This is separate as these loans will come from a private lender. Who is Eligible for the Coronavirus Stimulus Package?
In order to remove as much red tape as possible and speed up the funding process, the stimulus bill has outlined the following requirements you must meet:
In business before Feb. 15, 2020.
Employ less than 500 employees.
Have been impacted by the coronavirus.
While the amount of proof and paperwork required will be crystalized in the days ahead, West and Hartsock agree there is a presumption that if you are applying, you have been impacted. Even so, you will have to sign an affidavit acknowledging you need these funds as a result of the coronavirus.
Some ways you could have been impacted are though lost sales, supply chain issues, product chain issues and lost opportunities. There is gray area there, and experts agree this is for speed to get the funds released and available to those who need it.
How Do I Receive Funds from the Coronavirus Stimulus Bill?
While the process still remains to be ironed out further, in a nutshell, most business owners should plan on heading to their home bank (as long as it’s FDIC Insured) and being prepared to fill out minimal paperwork. There are a lot of lenders that are SBA preferred lenders, but they are releasing regulations to where every bank that is FDIC Insured is able to release these loans.
Then starts an 8-week clock for small business owners to use the funds on qualifying expenses to keep their business afloat and become eligible for loan forgiveness.
How Do I Calculate My Loan Amount?
Small business owners are eligible to receive 2.5x payroll to use for things such as payroll, rent, utilities and health care benefits. The loans from the coronavirus stimulus bill are based on a 12-month trailing payroll average, but what does this mean?
Essentially, you will want to take your payroll average from Feb. 15, 2019 to Feb. 15, 2020, up to $100,000 employee salary, excluding employer tax. This also includes commissions and bonuses. Then, average that for a 12-month period and multiply that times 2.5 for your eligible loan amount. There is a $10 million cap to the loan as well.
Even businesses that have been operating for less than a year are eligible; however, you will have annualize it based on the months you have been operating.
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