Unprecedented Times; Unprecedented Aid
Beginning in March 2020, Congress moved swiftly to offer relief from the financial hardships of the COVID-19 pandemic. The Coronavirus Aid, Relief, and Economic Security Act (also known as the CARES Act) was signed into law on March 27, 2020. It directed two trillion dollars in funding towards seven key areas: individuals, large corporations, state and local governments, public health, education, federal social safety net programs, and small businesses.
Further influxes of cash, both to the CARES Act programs and as separate bills, came in the summer and winter of 2020, with the American Rescue Plan of early 2021 being most recent.
Read on to discover what the CARES Act can do to help your small business.
The CARES Act: What You Need to Know
Of the two trillion dollars in the original CARES Act, $375 billion was directed towards small businesses—defined as companies with 500 or fewer employees. This funding expanded the preexisting Economic Injury Disaster Loan (EIDL) program and established the Paycheck Protection Program (PPP). Additional opportunities for tax credits, counseling, and debt relief were also made available.
The purpose of these programs was to allow businesses to keep their employees on the payroll, preventing further economic hardship for individuals.
Paycheck Protection Program Loans
Central to the mission of the CARES Act’s small business aid is the Paycheck Protection Program’s, or PPP’s, loans to small businesses. These loans are forgivable on a sliding scale, up to 100%, based on how many employees were kept on and how many compensation packages were maintained on a pre-pandemic level. In other words: the fewer layoffs or paycuts you made, the more of your PPP loan that can be forgiven.