– Est. –
1927

Senate Bill Provision Offers Hope to Small Business

Senate Bill Provision Offers Loan Forgiveness to Small Business for Payroll Costs

In the face of the COVID-19 pandemic, the United States Senate is currently debating S. 3548, the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act.” It is estimated that the CARES Act could provide a $1 to $2 Trillion stimulus in economic aid to both businesses and workers.

While multifaceted, one provision sets forth a significant benefit to small businesses that can apply for forgivable loans from the Small Business Administration (SBA). Here are the basics of what this section of the CARES Act provides:

  • Provides for bridge loans to small businesses under 500 employees
  • Uses the SBA’s current Section 7(a) loan program
  • Loans support payroll costs incurred between March 1st & June 30th, 2020 (referred to as the “Covered Period”)
  • Employers can borrow up to $33,333 (equivalent to annual compensation of $100,000 per year) of compensation paid to employees during the Covered Period
  • Borrowers under this program can have the loans forgiven if they maintain “payroll continuity” during the Covered Period (presumably not laying employees off)
  • Application processes are to be expedited by the SBA and certain fees are waived
  • Loans forgiven under the program are not considered taxable loan cancellation income
  • At this writing, the bill appropriates $350 billion for this program

The Senate bill is currently embroiled in intense partisan debate, although the SBA loan provision stands a real chance of passage. Watch the SamuelsLaw Blog for future updates.

Michael D. Walker is a business, tax and estate planning attorney who has worked with individuals and small to medium-sized businesses for nearly 30 years. A careful listener, Michael skillfully guides his clients to meet the wide variety of legal challenges they face in our current complex world.

Share on facebook
Share on twitter
Share on linkedin
Share on email