Making the CARES Act Work for You

Small Business Management
By Team Bento March 30, 2020

The new Coronavirus Aid, Relief, and Economic Security Act (CARES) established stimulus programs to help many different sectors of the US economy. It includes $350 million for small businesses in the form of a loan program known as the Paycheck Protection Program. The big benefit is that the loan will be forgiven if certain criteria are met. This may be the lifeline you have been looking for.

The maximum loan is for an amount equal to average monthly payroll cost x 2.5, up to $10 million. Payroll costs include compensation and benefits both for employees in the United States making $100,000 or less. Payroll does not include any money spent on 1099 independent contractors; they can apply for funds on their own.

These small business loans will be forgiven if at least 75% of the funds received are used for payroll costs. The remaining amount can be spend on interest on mortgage obligations, rent, and utilities. Be sure that you do not use the loan for an unauthorized purpose or you lose the forgiveness benefit. The loan forgiveness cannot exceed the principal, and it will be reduced if there are headcount reductions or payroll cuts exceeding 25%. On the other hand, you’ll receive credit if you are able to bring back any previously furloughed staffers. This is looked at on a per-employee basis, not as an average.

The goal here is to continue your employees’ pay so that they will be in place to return to work when this crisis is over. That means you can use funds to meet payroll even if you have no regular work for your employees to do right now. You can have them do planning or online training as a way to make them even stronger workers when things return to normal.

Who’s Eligible for These Small Business Loans

The list is inclusive. You have to have been in business before February 15, 2020. Beyond that, eligible organizations include:

  • Small businesses with fewer than 500 employees, including single physical locations of food service and accommodation businesses
  • A 501(c)3 with fewer than 500 employees
  • Individuals operating as sole proprietors, independent contractors, or other self-employed trades or businesses
  • Tribal businesses, 501(c)9 veterans organizations, and other busineses that meet the Small Business Administration’s size standard.

The best source for detailed information about this and other loan programs is the SBA itself. The U.S. Chamber of Commerce has good information on some of the nuances of this program as well other information for small businesses in the time of coronavirus. Many states are passing their own programs, so check our own state’s Chamber of Commerce to stay current on those programs, too.

You can download the application from and then submit it to your bank or credit union.  If you have questions, contact your bank, your local Chamber of Commerce, or you local small business development center. Scams abound, so only deal with folks you already know.

Small businesses and nonprofit organizations build American communities. We’re glad that programs like these will keep them in operation.

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