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A Brief Guide to Getting Help From The CARES Act for Covid Relief

If you’re going to need a loan or a lifeline—and most of us probably will—treat the effort like you're trying to win an essential new customer.

The CARES act, passed by the House and signed into law by President Trump on Friday promises billions of dollars in needed relief for millions of American businesses—and their employees—hard hit by the economic fallout of the coronavirus.

As you’d expect, CARES is 880 pages of complexity (Full text here) so while there will be lots of “how-to” guides for you, as with every program born in Washington, CARES will reward scrutiny and digging into the fine print by professionals (think: Taxes). Given the extent of the economic damage, expect an unprecedented number of businesses to seek loans and aid. Move quickly here.

Even if you’re in great financial shape today, it’s worth understanding what’s in CARES—just in case. And if you’re going to need a loan or a lifeline—and most of us probably will—best practice here is to act as if CARES was an essential new piece of business you’re trying to win and devote the kind of resources—internal and external—you would to work on that kind of project.

We’d encourage any firm to designate a champion, and a team if possible, to focus on understanding and applying for the programs. Give them the time, resources and external help they’ll need to be successful. This won’t go smoothly.

What’s in the Act for Business?

There will be a lot written about CARES—there already has been—but the essentials are:

For all businesses, the act features a large array of tax relief plans, including delays of employer-side social security tax payments until Jan. 21, 2021 (50%—with the other 50% not due until Dec. 31, 2022), a 50% refundable payroll tax credit for wages under certain circumstances and more. The non-partisan Tax Foundation has a straightforward rundown of what’s in CARES and law firm Venable has a detailed breakdown.

For the nation’s largest firms, it will provide billions in loans to air carriers or national-security-related businesses, part of a package $500 billion in loans backed by The Federal Reserve.

For mid-sized businesses, the law asks the Treasury and the Fed to create a new facility for the nation’s banks to create loans for businesses with 500 to 10,000 employees. Interest on these loans would be capped at 2% with no principle or interest due for at least six months. Law firm AkinGump has a good overview, and your banker should be up to speed soon.

For small businesses—companies with up to 500 employees—are eligible for backstopping in the form of low-interest loans—the so-called “Paycheck Protection Programs” to cover up to 250% of payroll and other expenses, up to $10 million. Need money fast? Apply for a $10,000 SBA Economic Injury Disaster Loan.

But, as I said above, getting this relief will take some work. Our friend Verne Harnish shared a great guide to CARES for small business owners that’s worth spending time with ASAP to get more up to speed.

Good luck.


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