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What Can the CARES Act Do for Your Organization?

March 29, 2020

Christopher K. Jones

Sands Anderson PC

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Richmond, Virginia

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is now U.S. law. The Act offers relief to small businesses by creating more favorable terms for loans provided by the Small Business Administration. If you own or manage a small business or non-profit, you should be aware of the following.

Who can apply for the loan?
Any:

• Business or non-profit with 500 or fewer employees, or
• Independent contractors, or
• Sole proprietors.

Operating as of February 15, 2020.

What are the allowable purposes for the loan?

• Use as working capital, acquisition of equipment, debt refinance, change of ownership, and real estate purchases.
• Meeting payroll, utilities, rent, mortgage, or other debt obligations incurred before February 15, 2020.

What is the amount of the loan?
The maximum amount of the loan is the lesser of:

• 2.5 times the organization’s average monthly payroll
• $10,000,000.00.

What are the terms of the loan?

• Interest rates cannot exceed 4% per year.
• Maximum maturity of the loan is 10 years.
• Lenders are required to defer payments for at least 6 months.
• There are no SBA fees and prepayment penalties are waived.

Loan Forgiveness
Borrowers are eligible for forgiveness of loans in an amount equal to payroll + rent + mortgage interest + utilities during the first eight weeks following the origination of the loan. The amount of loan forgiveness will be reduced if you:

• Decrease workforce during covered period, or
• Reduce wages by a certain amount during covered period.

You can apply for SBA disaster relief loans here. If you have any questions about this process, or other relief that may be available to your organization, contact a member of Sands Anderson’s Retail and Hospitality Group.