The CARES Act: What You Need to Know Now for Your Small Business

Like many of my clients, I’m a small business owner. When the coronavirus pandemic started to shut down  the American economy, in addition to worrying about the impact on my clients, I also started worrying about what I would do if forced into the heartbreaking decision to lay off or furlough some of my own employees. We are family here, and the thought of telling them I couldn’t afford to keep them on the payroll would be heart-wrenching and one of the worst things I could imagine.

We have been blessed thus far with plenty of work to do — even though we’re doing some of it remotely — and I have been delivered from the need to have those difficult conversations, for which I’m deeply grateful. But many of my small business clients haven’t been so fortunate. That’s why I was relieved to learn about the massive economic stimulus package taking shape in Congress, and why I urged my business-owner clients to hold off a little longer on making layoff decisions and keep those employees on the payroll. Here’s why:

Congress has passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which contains $350 billion in disaster assistance loans targeted toward small businesses by the Small Business Administration (SBA). Assistance includes the Paycheck Protection Program (PPP), enabling employers to delay or avoid laying off or furloughing employees. You can qualify for this as a small business owner if you:

  • Have 500 or fewer employees or you otherwise meet the SBA size standard;
  • Are a 501(c)(3) organization with 500 or fewer employees, including all full-time or part-time workers;
  • Are an individual operating as a sole proprietor;
  • Are an individual operating as an independent contractor;
  • Are a self-employed individual carrying on a trade or business;
  • Are a Tribal business meeting the SBA size standard;
  • Are a 501(c)(19) Veteran’s Organization meeting the SBA size standard.

Applications for the program begin April 3, 2020, for small businesses and sole proprietors; independent contractors and self-employed individuals may begin applying April 10, 2020. You can find the application here.

The US Chamber of Commerce has produced a helpful guide to the program, including the application process, the information you’ll need to provide to lenders, and other important information. You can read the guide here.

Loans granted under the PPP offer the following features:

  • A maximum interest rate of 4%;
  • The loan term is up to 10 years;
  • No personal guarantee or collateral required;
  • Payments deferred for six to 12 months;
  • Part of this loan may be forgiven and not counted as income if spent during the first eight weeks on operating expenses.

In addition, loans may be forgiven if the proceeds are used for:

  • Payroll costs;
  • Rent due on a lease in force before February 15, 2020;
  • Electricity, gas, water, transportation, telephone, or internet access expenses due for services beginning before February 15, 2020;
  • Group health insurance premiums and other healthcare costs.

In addition to the PPP, the CARES Act also provides $10 billion to the SBA for Economic Injury Disaster Loans (EIDLs), a program that the SBA has offered for some time. These loans provide the following features:

  • Amounts up to $2 million;
  • 30-year term;
  • 3.75% for small businesses and 2.75% for non-profits;
  • First month’s payments are deferred a full year from the date of the promissory note.

An application for the SBA’s EIDL program is available here.

Here’s what you’ll need to have available when you apply for these programs:

  • Identifying information for your business;
  • Your business tax identification number (TIN);
  • Your average monthly payroll;
  • The number of jobs supported by your business;
  • The purpose for which you are seeking the loan;
  • A list of all owners who hold at least a 20% stake in the company;
  • Documentation of your employee headcount and your payroll costs.

In addition to the information from the US Chamber of Commerce, the US Treasury Department has a fact sheet with helpful information; you can access it here.

If you believe your business qualifies for the assistance provided by the CARES Act, you should apply as soon as possible. While the amount of money available is huge, it is limited, so you want to be first in line, with all your materials ready. Another business-owner client of mine reported having trouble completing the online applications; so many people were using the SBA website that he was getting bumped off (despite applying at 4 AM). Fortunately, he told me that the application process was getting easier as the SBA increases capacity and streamlines the process. Either way, the sooner you get started, the more funding will be available.

As always, I’m here to help, advise, and answer questions. We’re all in this together, and if we work together, we can help our businesses and our country get through this crisis and emerge on the other side, stronger and more united than ever. If you have questions about the stimulus package, your benefits, or any other financial matter, please email me at I also encourage you to share our content with friends, family, and co-workers — you can also sign up to receive our blog via our website here.

Stay Diversified, Stay YOUR Course!

And… Stay Your Social Distance… and Wash Your Hands!

Empyrion Wealth Management (“Empyrion”) is an investment advisor registered with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. Information pertaining to Empyrion’s advisory operations, services and fees is set forth in Empyrion’s current Form ADV Part 2A brochure, copies of which are available upon request at no cost or at The views expressed by the author are the author’s alone and do not necessarily represent the views of Empyrion. The information contained in any third-party resource cited herein is not owned or controlled by Empyrion, and Empyrion does not guarantee the accuracy or reliability of any information that may be found in such resources. Links to any third-party resource are provided as a courtesy for reference only and are not intended to be, and do not act as, an endorsement by Empyrion of the third party or any of its content. The standard information provided in this blog is for general purposes only and should not be construed as, or used as a substitute for, financial, investment or other professional advice. If you have questions regarding your financial situation, you should consult your financial planner or investment advisor.