Friend –

Small businesses across the nation are feeling the economic effects of COVID-19. This week, Congress has acted by passing the CARES Act, which will bring economic relief directly to Americans. Specifically, the CARES Act creates a “Paycheck Protection Program” for small employers, self-employed individuals, and “gig economy” workers, with $350 billion to help prevent workers from losing their jobs and small businesses from going under due to economic losses caused by the COVID-19 pandemic.

The “Paycheck Protection Program” would provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers who maintain their payroll during this emergency. If the employer maintains payroll, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities would be forgiven, which would help workers remain employed, and affected small businesses and our economy to recover quickly from this crisis. This proposal would be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.

If you are a small business in the First District, I want to make sure you know what aid is available to you. Read below to see if you are eligible and how to access this aid.

Is your small business struggling due to the recent coronavirus epidemic?

• Your business may be eligible for a new Paycheck Protection Loan.
• This 4% interest rate loan is 100% guaranteed by the SBA.
• Physician practices are eligible, no matter how they are structured.

Who is eligible? 

• Businesses and 501(c)(3)s with less than 500 employees.

Where can you get this loan? 

• Any existing SBA lenders and any lenders that are brought into the program through the Treasury.
• You should talk to your preferred financial lender to see if they qualify.
• You can visit https://www.sba.gov/disaster-assistance/coronavirus-covid-19.

What can you use the loan amount for? 

• Payroll costs - Group health care benefits
• Employee salaries - Interest on ay mortgage obligation
• Rent
• Utilities
• And any other debt obligations occurred before Feb. 15, 2020.

How much can you borrow? 

• The maximum amount is the lesser of $10 million or 2.5 times the average monthly payroll based on last year’s payroll.

How long will it take to receive the money? 

• The SBA has authorized lenders to process, close, and service loans without SBA approval, giving you the means to invest in your business immediately.

What if you can’t pay it back? 

• First, all payment on principle, interest, and fees will be automatically deferred for six months.
• Second, for businesses that retain their staff up until June 30, 2020, this loan will be forgiven.

Can the entire loan be forgiven? 

• No, only the portion of the loan used to cover payroll costs, mortgage interest, rent, and utilities can be forgiven.
• In addition, only 8 weeks can be forgiven.

What does this bill do to provide relief for rural communities and farmers?

• The bill includes a number of small business provisions designed to help farmers stay in business and take care of their employees during this difficult time. These include provisions that allow farmers to work with their trusted farm credit institutions for the purposes of securing payroll tax loans, along with 1-year deferrals, 100% guarantees, and low rates.
• The bill provides $14 billion for the Commodity Credit Corporation (CCC), the funding mechanism for all major USDA programs. It also appropriates an additional $9.5 billion to specifically respond to losses due to COVID-19. 
• Additional funding is provided for USDA agencies that are on the front lines of responding to COVID-19, including the Food Safety Inspection Service (FSIS), the Animal and Plant Health Inspection Service (APHIS), and the Farm Service Agency (FSA). 
• The bill also includes $100 million to provide financing for rural broadband through the ReConnect program, and $25 million for the Distance Learning and Telemedicine program to provide grants for equipment and connectivity improvements. 

Employee retention credit – how will this work? 

• The Employee Retention Credit provides a refundable payroll tax credit equal to 50 percent of up to $10,000 in wages per employee (including health benefits) paid by certain employers during the coronavirus crisis. 
• The credit is available to employers:
  • whose operations were fully or partially shut down by government order limiting commerce, travel, or group meetings due to coronavirus, or
  • whose quarterly receipts are less than 50% for the same quarter in the prior year.
• Wages paid to employees during which they are furloughed or otherwise not working (due to reduced hours) as a result of their employer’s closure or economic hardship are eligible for the credit. 
• However, for employers with 100 or fewer employees, all employee wages qualify for the credit, regardless of whether they are furloughed or face reduced hours.
• To prevent double dipping, employers that receive Small Business interruption loans are not eligible for the credit. Additionally, wages that qualify for the required paid leave credit are not eligible for the credit. 
• The credit is for wages paid by eligible employers from March 13, 2020 through December 31, 2020.

In addition, the full, final text of the CARES Act can be found here. Your question not answered here? Please contact my office by email or at 202.225.4261 and we will either answer your question or put you in touch with someone who can.

Please share this information with your friends, family, and neighbors as information is key during times such as these. I will continue to update you as more information becomes available.

Sincerely,

Rob