CARES Act – Free Money for Small Businesses & Independent Contractors!
So unless you’ve had your head in the sand, and we certainly wouldn’t blame you if you have, you’ve probably heard that the CARES Act was passed. This is great news for everyone! As small business owners, we wanted to make our fellow small businesses owners aware of what’s in it for them.
The first part is the stimulus money of $10,000. Every small business owner or independent contractor should apply for the Economic Injury Disaster loan of $10,000. This is a forgivable loan if used for economic relief due to COVID-19. This is probably an easy qualification for nearly every small business to meet.
Here is the link for this Disaster Loan Assistance: https://covid19relief.sba.gov/ This is an easy process and should take about 10 minutes max. Our understanding is that this is on a first come first service basis. You will need to know your gross receipts for 2019 and your cost of goods sold. For businesses that need more money you can apply for up to $2M in loans.
The next part of the CARES Act we want you to know about is the Payroll Protection Program. The purpose is to keep people employed. This is for companies under 500 employees, you don’t have to be shut down completely or partially. Our understanding is that this will cover both your employees and contract workers. The max loan is 2.5 x your monthly payroll costs, Rent, utilities. This money is to only be used for these business expenses. If it is, the loan will be forgiven. This portion of the CARES Act is provided through your bank and not the SBA (Small Business Administration). Applications opened today for these loans. You would log in to your business banking account and the information should be readily apparent. Keep in mind, not all banks are up and running with this.
We just want you guys to know that there is now free money for small businesses. And we wanted to share some of the information that we know of and we also want you to know that we are not CPAs and we’re not attorneys. So we’re just gonna share with you what we know to help out you, our friends and clients who might own a small business.
So I have to say, I’m actually pretty impressed with the Cares Act, what they passed on Friday. I mean, it’s pretty comprehensive. I mean it’s just $2 trillion. I think back in 2008, I think the total bailout package was like 700 million, so this is just significantly larger than what we’ve seen in the past.
The first one is called an Economic Injury Disaster Loan. And this is basically available to any small business, independent contractor, pretty much anybody who’s in business for themselves. If you file a schedule C on your tax return, you should go and try and get this $10,000.
Everybody should be filing for this. Every person in business.
It’s basically free money to support local businesses, small businesses. So we are totally adamant that everybody, every small business should sign up for this.
There’s a lot of businesses that need help. Tailors, dry cleaners, massage therapists. There’s just so many businesses that are affected and so this is pretty easy money. When you go on and fill out your application, you do need to know what your gross revenue, your gross receipts were in 2019, if you have any costs of goods sold. If you produce something, than you would have cost of goods sold.
There are more loans that are available if you need it. Each company could potentially get up to $2 million at pretty reduced interest rates. Possibly between 3.75 and 4%. And then amortized over several years.
The next one to talk about is the Payroll Protection Plan and this is again just a great loan opportunity that could be forgiven, the entire amount, to keep employees employed. So basically, the government’s going to have to pay out one way or another. Either it’s in helping businesses retain their employees or it’s with employees and unemployment.
That’s for businesses with 500 or fewer employees. So it is a small business loan and you do need to apply through your bank, so whoever you have your business account with. Loan applications started today for that payroll protection plan loan but not all banks are up and running. Bank of America is ready to rock and roll and but Chase is not and as of last night they didn’t know when they would be available to start processing applications.
So what you would do is, you have to log in to your account, to your business account and then information is all right there and it’s pretty obvious. It’s a pretty easy application process and so what this payroll protection plan will cover is your payroll. So if you have 1099 contractors, it will cover that as well. So basically, any job that you are providing. So it doesn’t have to be an employee, but any job that you are providing, that’s what they’re trying to preserve. So it’s your payroll, independent contractors, your rent if you pay rent, which I would assume most businesses would, and then your utilities. And so you take that lump sum, and then it’s times 2.5 because they are trying to support companies for basically 2 1/2 months. So, and again, if all of that money is used for those expenses, so to preserve your employees and your independent contractors and pay your rent and your utilities, our understanding is that that loan will be forgiven.
Another point too is that these loans are nonrecourse meaning no personal guarantees or liens on personal & business assets.
We are not attorneys, we are not CPAs, never played one on TV. So definitely do your own due diligence and check it out. But if you work for a small company, send this to your owner. There’s a lot of money out there that’s available. We’ve been getting a ton of information form our Washington Association of Realtors because as realtors, we’re all independent contractors so this money is potentially available. And then too, so it’s not like per household either. So like, you know, we have one of our vendors, they’re a husband and wife team. She does housecleaning and he does yard servicing, so both of those two companies could qualify for that $10,000. So again, they just have to– I mean I think one of the key things is, you know, do you file a schedule C for both of those two businesses and if you do then definitely, you should apply for that $10,000 grant which is kind of what it is. It’s just a grant. So again, the $10,000 economic injury disaster loan. That’s through the SBA, but the payroll protection plan small business loan is actually through your bank. So anyhow, if you have any questions, reach out to us. This is something that we’ve been paying a lot of attention to ’cause you know, we have obviously a ton of friends, clients that are all small business owners. I mean our photographers, our stagers, our home inspectors – they would qualify for that.
We hope this helps! Please share this email and video to anyone you think could use this information.
Stay safe out there!
