Implications of the CARES Act for small businesses affected by the coronavirus
WHAT YOU NEED TO KNOW
- The tragic effects of the coronavirus (COVID-19) pandemic on the U.S. economy is especially felt by small businesses, which serve as the economic engine of the U.S. economy by employing approximately half of the domestic workforce.
- In response to the devastating effects of the coronavirus, on March 27, 2020, the federal government urgently passed the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”), which is the largest economic stimulus package in U.S. history aimed to bolster the U.S. economy by providing over $2 trillion in relief to individuals and businesses affected by the coronavirus.
- Under the CARES Act, the federal government will infuse funds of over $350 billion into the Small Business Administration’s (SBA) loan programs to provide qualified business more access to capital. By relaxing loan eligibility requirements to make it easier for small businesses to qualify for assistance and providing additional incentives in the forms of loan deferments and forgiveness, borrowers under these programs will be able to retain their employees and pay their bills for an extended period of time.
- To take full advantage of these federal loan incentives, small businesses will need to understand their options under the CARES Act. Business owners need to engage their lenders, accountants, and legal counsel early and gain a clear picture of the requirements to apply for these loans and take full advantage of the incentives provided therein. Act urgently, be diligent, and utilize relationships; it is reasonably foreseeable that the coming weeks will move at a frenetic pace with respect to the number of businesses around the country that will be applying for loans.
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