CARES Act – Small Business Update
The newly enacted CARES Act provides for forgivable small business loans. The maximum loan amount is 250 percent of average monthly payroll. The amount that qualifies for forgiveness is the amount spent for the following costs during the eight week period after the loan is made:
- payroll (limited to annualized $100,000 per employee)
- group health insurance costs
- mortgage interest
Please note, the average monthly wage test is based on wages paid during the period February 15, 2019 through June 30, 2019. If you were not in business during that period, the average monthly wages are based on February and March of 2020.
To receive loan forgiveness, the borrower will be required to submit a detailed application directly to the lender. The SBA will reimburse the lender for principal and interest on the amount forgiven. The amount forgiven will not be taxable income for federal income tax purposes. It appears that the deadline for loan applications is June 30, 2020. Regulations and procedures will be issued over the next 15 days.
In addition to the CARES Act, several cities and states have created loan and grant programs. In New Jersey, the EDA has created an Eligibility Wizard to help businesses determine for which they may apply.
Below are links to articles for further guidance on this topic. We will keep you informed as additional information becomes available and are happy to assist with loan applications. Please contact us if you have any questions, concerns, or need advisement during this unprecedented time. You can also check our Coronavirus Resources Page for more updates.