Broker Check

Business Owners and The CARES Act

| April 09, 2020
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I hope this email finds you and your family well during this crisis. As we all continue to battle
COVID-19, we want to reassure you that Private Capital Group remains fully committed and
dedicated to our clients, their families, and their futures.

The government has begun implementing aspects of the CARES Act over the past week and we
feel it appropriate to provide some insight on what that means for small business owners and
self-employed individuals. Below we have outlined how small businesses and self-employed
individuals can partake in the fiscal policies set into place during this crisis.  

Planning for small businesses challenges

No business has been hit harder than small businesses and they are facing a new and challenging
list of struggles every day to keep their doors open. Pressure to adopt innovative practices to
retain customers, pay employees, and keep both safe and healthy during this crisis will continue
to be a challenge in the coming weeks and months. Although much uncertainty still lies ahead,
new laws and measures have been implemented to provide relief for small businesses and
self-employed individuals. The CARES Act and the Families First Coronavirus Response Act have

instituted five primary measures to help small businesses and self-employed workers:

  • Access to loans and immediate emergency funds for business owners intending to
    continue to pay employees and remain open and for self-employed individuals, there are two
    loan types that have become available: Paycheck Protection Program and Economic
    Injury Disaster Loans.

The Paycheck Protection Program offers an interest rate of 0.5%, with a maximum loan
amount of the lesser of 2.5 times your monthly payroll (Maximum compensation
$100,000 per employee annually) or $10 million. Portions of this loan may also be
forgiven. The maximum loan used for payroll costs are capped at $100,000 on an
annualized basis for each employee. Due to the likely high subscription, it is anticipated
that not more than 25% of the forgiven amount may be for non-payroll costs. These loans
must be used for payroll, compensation costs, healthcare benefits, rent, utilities,
and mortgage interest incurred on existing debt. These loans were first available on April
3rd and will not consist of fees, personal guarantees, or collateral.  

The Economic Injury Disaster Loan is offered by the SBA and can be accessed through
an application process on their website. This will include quick relief in as little as three
days for amounts up to $10,000. The EIDL may be transferred into the Paycheck
Protection Program and may be deducted and eligible for forgiveness. 

  • Existing Small Business Administration Loans will be deferred for a six-month
    period. Business owners will not be required to make payments and the SBA will pay the
    lender starting with the next due payment. If current loans are already on deferment, this
    six-month deferment period will begin after your current deferment has concluded.

  • Debt forgiveness for payroll and operational costs, under the Payment Protection
    Program, is provided if the funds are used for payroll, mortgage interest payments, rent
    and utilities during the eight weeks following the loan inception. This forgiveness will not be
    taxable as gross income.

  • Employer tax credits may be used if your business is closed in accordance with
    government guidelines or if your business sees a 50% decrease in gross receipts. There are
    many stipulations to this relief, so be sure to contact your tax advisor for details.

  • Delayed tax payments due between now and January 1, 2021. You can delay payroll
    tax payments normally due between now and January 1, 2021. Half of these delayed tax
    payments are to be due on December 31st, 2021, and the other half to be due by December
    31st, 2022.  

If you have any questions or concerns on the Cares Act, the Paycheck Protection Program, or the
Economic Injury Disaster Loan program, please reach out to your advisor for further

We wish you and your loved ones all the best during this trying time.

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Disclosure from our Author:
Investment advisory services offered through PCG, a registered investment advisor. This e-mail may include forward-looking statements that are subject to certain risks
and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. The above communication is written by Michael
A. Higley. Any comments, opinions or facts listed are those of Mr. Higley.
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