Financial Lifeline for Small Business Owners: CARES Act

 In General
As a small business owner, I feel for the personal service providers whose businesses were suddenly forced to close during the shelter-in-place orders. These small business owners include your hairstylist/barber, personal trainer, manicurist, nanny, and/or pet sitter, among others. To help them stay afloat while we’re on lockdown, I’d like to help you help them.
On Friday, 3/27/2020, the CARES Act (Coronavirus Aid, Relief and Economic Security) was signed into law. It contains several programs to help small business owners. These programs will be a lifeline. Please forward this article to the small business owners you know. The first two programs have upcoming deadlines, so they should apply now.
These programs are available to the “self-employed” and “sole proprietors”. They don’t need to have employees to qualify, so a self-employed person like a hairstylist will be eligible.

Economic Injury Disaster Loan (EIDL) – APPLY NOW

  • There might be a limited amount of money in this EIDL program, so apply right away! 
  • For any small business that has fewer than 500 employees in all 50 states. Self-employed individuals and non-profits are also eligible for this program
  • Normally SBA (federal Small Business Administration) loans are very difficult to get, but their EIDL program has fewer rules and documentation requirements
  • The EIDL allows for a $10,000 emergency grant to be issued for anyone who applies for an EIDL. The $10,000 emergency grant is given to business owners within three days of their application, and they’re allowed to keep that money even if they don’t qualify for an EIDL!
  • The application is simple and should only take 15 minutes tops: https://covid19relief.sba.gov/#/
    • Note: ignore the website’s oddly specific time for completing the application, which they say is “two hours and ten minutes.”

Verizon Small Business Recovery Fund – APPLY NOW

Paycheck Protection Program (PPP)

  • A federal loan from the SBA (Small Business Administration) that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis
  • The loan will be at least partly forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (at least 75% of the forgiven amount must have been used for payroll)
  • Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees
  • For any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by coronavirus/COVID-19
  • Apply as soon as April 3, 2020. You have to go to a bank that is an SBA-approved lender, so start searching for a bank now: https://www.sba.gov/LenderMatch
  • More information from the SBA: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp

Pandemic Unemployment Assistance

One-time “Recovery Rebate”

  • Payment will arrive in May at the earliest
  • Single people with up to $75,000 in adjusted gross income in 2019 will receive a one-time payment of $1,200
  • Income limits apply. For example, married couples with adjusted gross income (AGI) up to $150,000 in 2019 will get a one-time payment of $2,400:
    • Married Filing Jointly: $150,000
    • Head of Household: $112,500
    • All Other Filers: $75,000
  • If you have kids age 16 and under, you’ll get an extra $500 per qualified child
  • Payments phase out (are reduced) starting at $100,000 for singles, and $200,000 for couples without children
  • If your 2019 income is too high, but your 2018 income meets the cutoff, then delay filing your 2019 return until the new deadline: July 15, 2020
  • If your 2019 income meets the cutoff, but your 2018 income was too high, then file your 2019 return ASAP

Other resources

Recent Posts

Leave a Comment