COVID-19 Assistance: Unpacking the CARES Act and EIDL

The Coronavirus Aid, Relief and Economic Security (CARES) Act is in place to provide relief to both businesses and individuals impacted by the coronavirus pandemic. The legislation includes elements like direct payments to individuals, increased unemployment benefits, delayed payroll taxes, use of retirement funds, increased 401(K) loan limits, excess loss limitations and more. It also includes an expansion of the Small Business Association’s (SBA) Economic Injury Disaster Loan (EIDL) program.

With guidance, the CARES Act and EIDL can be extremely helpful to companies and organizations. Below, we’ve outlined key elements of the CARES Act and EIDL program that our clients should know.

Coronavirus Aid, Relief and Economic Security (CARES) Act:

  • Expands EIDL program availability and eligibility through Dec. 31, 2020
  • Assists small businesses, certain nonprofits, sole proprietors, independent contractors and self-employed individuals
  • Application and funding through financial institutions as determined by the U.S. Treasury
  • Includes Paycheck Protection Program (PPP)
  • Loan amount based on lesser of 2.5 times the average monthly payroll during the past 12 months or $10 million
  • Allowable loan uses include payroll costs, group health benefits, rent, mortgage or debt interest and utilities
  • Eligible for loan forgiveness if funds are spent on allowable uses
  • Loans that are not forgiven are capped at a 4% interest rate for up to 10 years

Economic Injury Disaster Loan (EIDL) Program:

  • Applies to small businesses and certain nonprofits
  • Administered directly by the SBA
  • Advances of up to $10,000 paid within three days
  • Provides up to $2 million for specified usage, including accounts payable, payroll and debt obligations
  • Approval of the loan amount, collateral and length of repayment are based on credit history, current need and ability to repay
  • The interest rate is capped at 3.75% for small businesses and 2.75% for nonprofits
  • Loan terms range up to 30 years

Both assistance programs are comprehensive and can be complex to navigate, but SST is here to help. We’re closely monitoring any updates and encourage you to contact us with any questions or concerns.

Thanks to SST Partner Emily Cook for providing the content for this blog post.