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Coronavirus Aid, Relief, and Economic Security Act (CARES ACT)

Last week Congress passed, and the President signed the CARES Act.  There very well may be additional laws passed in the weeks to come, but for now this is what we have to work with.  Title I of Division A is named the – KEEPING WORKERS PAID AND EMPLOYED ACT.  This is a very SIGNIFICANT law and can help most all small employers (less than 500 employees).

In summary, if you receive the loan and retain employees as required, the loan will turn into a grant, simply meaning the debt is forgiven.  Below are salient facts:

  • No collateral required
  • No personal guarantee
  • 100% guaranteed by SBA
  • If you have to repay, the loan is for 10 years at 4%
  • No pre-payment penalty
  • Business must have been open by 2/15/20, which is when the covered period begins
  • The total program is approximately 350 billion
  • Allowable uses of the loan proceeds include (partial list)
    • Payroll
    • Health care benefits
    • Mortgage interest
    • Rent obligations
    • Utility payments
  • Loan amount is 2.5 times average payroll costs during one year period before the date on which the loan was made or $10 million.  Payroll, however, is VERY broadly defined

We have been contacted by a good number of clients already asking for our assistance in applying for the program through the SBA.  Should you want our help, please contact us immediately to begin the process.


A.L. Smith, CPA

A.L. Smith, Prof. Corp.

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