The Coronavirus Aid, Relief, and Economic Security (CARES) Act was an emergency measure passed by the United States government to add funding across many sectors to provide relief from the effects of COVID-19. In particular, it has been an essential step in assisting the entertainment, travel, and hospitality businesses who found themselves struggling massively with the lack of customers due to this deadly virus. The CARES Act wasn’t a stimulus package but rather something urgent to put in place quickly to respond to the widespread health and economic disruption of COVID-19.
The relief package consisted of USD $2 trillion to positively influence different aspects of the economy, of which small businesses played a critical role. So, let’s delve into this area a bit in the context of the CARES Act.
William D King: Benefits of the CARES Act for small businesses
USD $375 billion or more out of two trillion US dollars went to small businesses. Under this act, two programs became active – the Economic Injury Disaster Loan program (EIDL) and the Paycheck Protection Program (PPP). The focus is on PPP right now. The funding allowed the small companies to access grants and loans without having to return the borrowed amount. Small businesses with 500 or fewer staff tapped into this while taking advantage of other emergency funds like counseling, debt relief, and tax credit.
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The change caused by the introduction of the CARES Act
After the bill became effective, small businesses could apply for more funds with relaxed parameters, points out William D King. The relief program deadline also saw an extension. Then, unemployment benefits became a part of this, under which the Paycheck Protection Program (PPP) got an allocation of USD $284 million. It further eased areas concerning loan forgiveness, stimulus checks given to people, etc. Besides, companies could also apply for the second round of funding for up to USD $2 million. First-timers were still eligible for up to USD $10 million.
Earlier, businesses with 500 or fewer employees had access, but this opportunity became available to companies with lower than 300 or fewer people the next time. However, one condition for the grant has been that the company needed to show 25% of a slump in its last year’s income. More precisely, any employer seeking PPP loans could use the amount to cover compensation, business obligation, and other costs. Some could even look for complete loan forgiveness.
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All these steps in the face of the COVID-19 disaster helped many small companies to keep their operations running while ensuring employment for most people. If you also applied for the funds and have to repay the amount as per the relevant guidelines, you must stick to the process to avoid any challenges. Such emergency relief programs tend to be the anchor of the economic development of a country. Many American businesses could see through the devastating effect of the pandemic because of the emergency relief funds granted under the CARES Act. Many companies still have to come out of the unprecedented jolt; the good thing is the fund improved their survival rate says William D King.