The CARES Act and Your Small Business: The Essentials of the CARES Act, According to a Lawyer
COVID-19, or the novel coronavirus, continues to sweep unabatedly through the world’s population.
It was first noticed in China in the last days of 2019 and has subsequently moved to every country in the world. It is extremely contagious, and one of the only ways to prevent and control its spread is by social distancing or social isolation.
Therefore, most of the world’s countries, with the exception of one of two nations like Sweden, have implemented hard lockdown measures to try and prevent the world’s healthcare systems from being totally overwhelmed. This has resulted in an immediate shutdown of the global economy, and countries like the USA have implemented stimulus bills like the CARES Act in an attempt to counterbalance the devastating economic effects of COVID-19.
What is the CARES Act?
As a precursor to the essentials or imperatives of the CARES Act that every small business should pay attention to, according to the small business lawyer in Warren, let’s look at what the CARES Act is and how some of its benefits apply to small businesses.
The CARES Act, or the Coronavirus Aid, Relief, and Economic Security Act, was signed into law on 27 March 2020. It is a $2 trillion relief package designed to “protect the American people from the public health and economic impacts of COVID-19.”
The Essentials of the CARES Act that are applicable to small businesses
At this juncture, it is essential to note that a small business is defined as a “privately owned and operated business… [with] …a small number of employees.”
In the USA, the legal definition of a small business is defined by the SBA (Small Business Administration). And this description is limited by the number of employees and the industrial sector that the business operates in.
Now that we have an idea of the parameters and boundaries of a small business, let’s consider the primary aid as provided by the CARES Act.
The Small Business Paycheck Protection Program
This program is implemented by the SBA. And it is a loan that is designed to help small businesses pay wages and retain employees without laying them off or furloughing them. In order to achieve this, the Paycheck Protection Program is providing business owners with funds to pay up to eight weeks of payroll costs, including benefits. And, these funds can be utilized to pay interest on business mortgage loans, rent, and utilities. In other words, the CARES Act is providing the funds to keep small businesses running for 8 weeks without needing to generate an income.
While this is a great aid, it is essential to note that the small business owner has several legal obligations in terms of receiving this assistance. These include:
- The borrower must provide the SBA with accurate payroll costs at the time of application.
- Borrowers must abide by the SBA’s affiliation rules.
- The business, especially if it is seasonal, must be operational between 15 February 2020 and 30 June 2020 to be eligible for this loan.
While the application forms might be quite tricky to fill out, they are doable. However, it is far better to consult with a small business attorney before applying to ensure that you have complied with all of the program requirements.