We continue our five-part series where we answer your top questions regarding how Covid-19 affects your business.* With many states reporting an increase in cases, it's important to know how this could affect your business. We have the next three questions and answers below.
Are business owners included in the definition of self-employed for unemployment benefits under the CARES Act?
Yes. Business owners who are self-employed or part-time and lost work due to a coronavirus-related reason are eligible for unemployment benefits under the CARES Act.
Are state and federal grants available only for businesses that have been mandated to close down or are they also available for businesses that are remaining open but still impacted by the crisis?
The CARES Act provides tax relief to businesses impacted by the COVID-19 crisis that have continued to pay employees. The credit is available for any quarter in which the business: (i) fully or partially closed due to an order from a governmental authority related to COVID-19; or (ii) experienced a significant decline in gross receipts.
Under the CARES Act, the SBA Paycheck Protection Program provides more than $370 billion in funding for small businesses. Borrowers must submit a good faith certification that: (1) the loan is necessary to support ongoing operations under the current economic conditions; (2) the funds will be used for payroll costs; (3) the business does not have another loan pending under the SBA Paycheck Protection Program; and (4) the business has not already received a loan under the SBA Paycheck Protection Program. Businesses with fewer than 500 employees are eligible for up to $10 million in loans, which can be used for payroll and other expenses, such as insurance premiums, mortgage interest, rent, or utilities. Businesses are eligible for loan forgiveness equal to the amount that they spent on payroll costs and specified expenses during the 8-week period prior to the origination of the covered loan. Because the stimulus bill is designed to keep small businesses afloat during mandated COVID-19-related closures, it is likely that even businesses that have temporarily closed will be eligible for the program as long as it was in operation on February 15, 2020.
The U.S. Small Business Administration (“SBA”) provides low-interest disaster loans to help small businesses meet working capital needs or normal business operating expenses during the recovery period from a declared disaster, such as COVID-19. Due to social distancing recommendations, public gathering restrictions, and in some areas, “shelter in place” orders, small businesses are closing their doors in compliance.
Are there any special programs specifically for minority or female entrepreneurs?
Under the new legislation, there are no new programs providing loans, grants, or tax credits exclusively to minority or female businesses. However, to help promote the business interruptions loan program and provide other business support, the CARES Act directs SBA grants to regional Small Business Development Centers, Women’s Development Centers, and Minority Business Development Agencies, which can be used for training, advising, and education for COVID-19-related business challenges, and waives matching funds requirements for these grants.
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*This information is provided for information purposes only, and should not be construed as legal advice on any subject matter. You should not act or refrain from acting on the basis of any content included herein without seeking legal or other professional advice from Marvel Law.
