Many businesses face the biggest challenges they’ve ever seen due to the coronavirus pandemic. The federal government has stepped in to help small businesses make it through the crisis with the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Here’s a look at how these loans will help small businesses.
What the CARES Act Provides
The legislation was passed by Congress on March 25, 2020, making $349 billion available for Small Business Administration (SBA) loans. This amount was significantly larger than the previous bill that only called for $7 billion in loans. The CARES Act loans are intended to help small firms as quickly as possible so that they can pay for employees and other immediate expenses.
Understand EIDL and PPP Loans
The two types of loans available through this emergency funding are Economic Injury Loans (EIDL) and Paycheck Protection Loans (PPP). It’s possible to apply for both loans as long as the funds from each loan are used for different purposes. In other words, you can’t use both loans to pay for the same thing, such as payroll.
Important Points to Know
- Most small businesses have under 500 employees
- Nonprofits and veterans’ organizations are eligible for the loans
- EIDL loans provide up to $2 million via the SBA website
- Businesses pay an interest rate of 3.75%, while nonprofits pay 2.75%
- Applicants can request a $10,000 grant for working capital via EIDL
- PPP allows for a $10 million loan
Find out if your small business can benefit from the CARES Act loans. Another way to help your business during this pandemic is by getting the right insurance coverage. Do you have more questions about your commercial coverage?