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CARES ACT: Disaster Relief Loans

CARES ACT: Disaster Relief Loans

Life sure has changed for all of us the past few weeks as our businesses have been temporarily closed and we can only leave our homes to go grocery shopping or pick up medicine. Thankfully, we just had some great news come from Congress as they passed the Coronavirus Aid, Relief, and Economic Security Act or the “CARES Act”.

This post is to help provide a summary of how this relief program may affect your business. All of the information should be verified on your own through the SBA site link below and other government resources.


Title I of the CARES Act focuses on supporting U.S. small businesses by establishing the Paycheck Protection Program which is designed to incentivize workforce continuity during the ongoing pandemic by providing forgivable loans to eligible businesses.  The Paycheck Protection Program will lend up to an aggregate amount of $350 billion during the period beginning retroactively on February 15, 2020 through June 30, 2020. 

 If you want to take advantage of this, APPLY AS SOON AS POSSIBLE if your business is eligible.

The first step of the loan application takes about an hour to complete.

Small Business Eligibility

In order to be eligible for loans under the Paycheck Protection Program, a business must be a small business concern (as defined in the Small Business Act), with not more than 500 employees (full-time, part-time or otherwise).   These are further defined as restaurant and hospitality, self-employed individuals, and “gig economy” individuals.   

The CARES Act waives the typical requirement that the borrower is unable to obtain credit elsewhere for loans.  Instead of determining a borrower’s creditworthiness and ability to repay the loan, lenders are required to only consider (a) whether the borrower was in operation on February 15, 2020 and (b) if the borrower either had employees to whom it paid salaries and payroll taxes or paid independent contractors.  Borrowers must certify to its lender that, among other things, a loan is necessary in light of the economic uncertainty created by COVID-19.

While the CARES Act permits a broad range of small businesses to participate in the program, the Senate included a statement of intent for the SBA to issue guidance for lenders to prioritize loans to small business concerns and entities in underserved and rural markets, including veterans and members of the military communities, small business concerns owned and controlled by socially and economically disadvantaged individuals, women and businesses in operation for less than 2 years.

Amount and Authorized Uses

The size of the loans would equal 250 percent of an employer’s average monthly payroll. The maximum loan amount would be $10 million. Covered payroll costs include salary, wages and payment of cash tips (up to an annual rate of pay of $100,000); employee group health care benefits, including insurance premiums; retirement contributions; and covered leave. The cost of participation in the program would be reduced for both borrowers and lenders by providing fee waivers, an automatic deferment of payments for one year, and no prepayment penalties. Loans would be available immediately through more than 800 existing SBA-certified lenders, including banks, credit unions, and other financial institutions

Our hope is that all of your businesses can get through this tough time. We are doing all we can to provide as much information to the lash artist-specific community.


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