Back to top

Tax Alerts

Click here to go back

Loans and Benefits Available to Small Businesses - CARES Act

Posted by Admin Posted on Apr 01 2020

Enhanced Unemployment Benefits

  • Eligible if unable to work due to COVID-19 or business is shut down
  • Self-employed individuals are eligible
  • Benefit based on income plus $600 per week provided by Federal government
  • Benefits for 39 weeks
  • Extra $600 from Federal government, will last up to 4 months
  • Use to apply
    •     Appears applications are available for employees
    •     Does not appear to be set up for self-employed persons yet – will need to call


Payroll Protection Program

  • Eligible if less than 500 employees, including sole proprietorships, independent contractors and nonprofit organizations
  • Loan to cover payroll and other operating expenses
  • Immediate cash loans and a portion may be forgivable
  • Maximum loan is 250% of average monthly payroll
    •     Example:  Monthly payroll $10,000 x 250% = $25,000 maximum loan
  • Monthly payroll includes:
    •     Group health benefits
    •     Retirement benefits
    •     State and local payroll taxes
    •     Sole proprietor and independent contractor compensation (up to $100,000 per year)
  • Loan may be used for:
    •     Payroll costs
    •     Rent
    •     Interest on mortgages and other debt incurred before 3-1-2020
    •     Utilities
  • Loan is forgiven to the extent loan proceeds are used for payroll costs, rent, interest on specified loans and utilities
  • Interest rate is 0.5% (one-half percent) and maximum term is 10 years
  • Payments can be deferred from 6 months to 1 year
  • Application is required for forgiveness providing documentation of costs paid
  • Loan forgiveness is reduced in proportion to reduction in number of employees or employee salaries are reduced by more than 25%
  • Reduction in forgiveness can be avoided if employees are rehired or compensation is increased in allotted time period
  • Apply for Payroll Protection Program loan through any SBA lender (referred to as a 7(a) lender)


Economic Injury Disaster Loan (EIDL) and Grants

  • Eligible if under 500 employees, including sole proprietorships, independent contractors and nonprofit organizations
  • Emergency $10,000 GRANT is available
  • EIDL Loan
    •     Working capital loan up to $2 million
      •         Can be used for any costs that could have been paid if the disaster had not occurred
    •     Interest rate is 3.75% for businesses and 2.75% for private nonprofits
    •     Maximum loan term is 30 years
    •     Apply for loan online, by mail, in person or by phone
    •     Online application site is
    •     Businesses can apply for both a Paycheck Protection Plan loan and an EIDL loan
      •         EIDL loan must be used for purposes other than those for the Paycheck Protection Plan loan


Labenz & Associates LLC Disclosure:  The information provided is general in nature based on provisions as of March 31, 2020.  Additional provisions may apply.  Please discuss the provisions with your tax advisor and SBA lender.