Earlier this year, the federal government of the United States signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The legislation is geared toward assisting both individuals and businesses to maintain a level of economic security despite the impact of the ongoing pandemic. The CARES Act has made $2 trillion available to citizens of the United States through various avenues (stimulus checks, loan programs, etc.). This makes it the most substantial bill ever passed by this country’s government. With this information from leading 401K provider Ubiquity, here’s what you need to know about the legislation as a small business owner.
Crucial Details About the CARES Act
No one has been left behind in the measures taken by the CARES Act to ensure the economic security of American citizens. About $350 billion was allocated specifically for small businesses that have been disrupted or otherwise negatively impacted by the viral outbreak. Here are a few key components of the CARES Act:
- Paycheck Protection Program (PPP): Business owners are struggling to retain employees at the moment. Many are down to skeleton crews, barely hanging on by a thread. This program, sourced by a wide array of lenders, is intended to provide employers with an emergency loan. Borrowers may have their balances forgiven if the funds are used for payroll, rent, mortgage, and utilities through the end of June. Those eligible to apply include:
- Veteran organizations
- Small businesses made up of 500 employees or less
- 501(c)(3) non-profits made up of 500 employees or less
- Small businesses that have been negatively affected by the coronavirus pandemic anywhere between February 15-June 30, 2020.
- Economic Injury Disaster Loan (EIDL): This is offered as either a loan or a grant, both provided by the Small Business Administration (SBA). Loans are available with low-interest rates with a maximum borrowing amount of $2 million. This is a great option for businesses that have experienced a massive loss of revenue amid requirements to close or alter business hours for non-essential businesses. (Keep in mind that eligibility has been expanded to small businesses earning less than $200,000 per year.) Those eligible for this funding include:
- Small businesses that employ 500 individuals or less
- Cooperatives, tribal businesses, and Employee Stock Ownership Plans (ESOPs)(all employing 500 or fewer people)
Additional Information on the CARES Act and Opportunities for Financial Security
Tax laws have also been relaxed to assist business owners and others during this time. Instead of being required to file and pay taxes by April 15th, the deadline has been extended by three months to July 15th instead. Businesses whose operations have been partially or totally suspended have also been allowed to receive a 50% tax credit on wages that were (or will be) paid between March 13-December 31, 2020.
Read also: Small Business Taxes: Changes in 2020
In light of all the economic assistance programs being offered at this time, remember the importance of your 401K. This is a cornerstone of financial stability, so you must ensure that you are doing all you can to continue making contributions and growing these funds for your retirement. A 401K plan provider is critical to maintaining your funds during this time of unprecedented uncertainty. Get in touch with a provider today to keep your 401k on track.
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