COVID-19 has impacted a massive amount of businesses and individuals, so as a response, the United States government has passed three landmark acts, including the largest economic stimulus package in history. As a small business that has been affected by COVID-19, here are ways that you can take advantage of the stimulus package:
Low-Interest Loans and Paycheck Protection
As part of the Coronavirus Preparedness and Response Supplemental Appropriations Act, $8.3 billion in emergency funding has been allocated to the Small Business Administration and its Disaster Loans Program. The Small Business Administration began offering disaster loans of up to $2 million that can be paid in a period of up to 30 years (primarily for businesses of under 500 people or sole proprietors). These loans have a low-interest rate of 2.75% for non-profits and 3.75% for other businesses. This funding can be used for expenses like bills, utilities, rent, and payroll costs.
The Small Business Administration will also direct funds to the Paycheck Protection Program. Through this program, SBA-approved lenders (such as banks) can offer small businesses low-interest loans of up to $10 million to cover multiple months of payroll, mortgage, or other payments needed to keep your business running at this time. This makes it easier for small businesses to pay back loans without experiencing financial burdens in the future.
As part of the CARES Act, tax payments for corporations will not be due until October 15, 2020. Small businesses can also defer federal payroll taxes until December 31, 2021, at which time 50% of the tax will be due. The remaining amount must be paid by December 31, 2022. Because of this tax deferral, many small businesses can provide temporary funding for employees with the extra money saved.
Employee Leave and Unemployment Regulations
Those who have lost jobs due to COVID-19 can receive unemployment payments for at least 13 weeks, which is going to be extremely important for many businesses that have been forced to shut down. Companies with 500 employees and under are going to be required to pay sick leave if an employee must take off work to care for someone with COVID-19 or in isolation, but small businesses under 50 employees could be exempt from providing paid leave to employees if it would greatly burden their company.
All of these guidelines have been put in place to protect employees or families of business owners that might be struggling. To prepare for these new changes, small businesses should be budgeting any potential cost they might need to pay related to sick or family leave of employees who have worked with them for at least 30 days. The future is unpredictable, but with assistance from the government and making preparations ahead of time, businesses are likely to soon get back on their feet.
To learn more about what your company can do to receive assistance, visit sba.gov.