If your firm is beginning to feel the economic effects of the COVID-19 epidemic, or if you want to be prepared for when you do, ACRA has been sharing information and resources meant to help you understand how you can take advantage of the programs in the recent legislative packages.

Last week Congress passed the CARES Act, which provides direct relief to both businesses and individual Americans during the COVID-19 pandemic. With the majority of CRM firms considered to be small businesses under federal size standards, the CARES Act specifically applies to ACRA members.

The CARES Act established the Paycheck Protection Program, which 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. It is retroactive to February 15, 2020 to help bring workers who have been laid off already back onto payrolls.

The office of Congressman Rob Wittman (R-VA) has shared another helpful summary for small businesses to determine whether they are eligible for the Paycheck Protection Program and how to access the 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 any 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.

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.

Read more about the CARES Act and how it affects ACRA members in our posts over the last week, and stay tuned to the ACRAsphere for additional information.