The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that government passed last week includes a provision for small businesses, including non-profit organizations, with less than 500 employees to receive loans of up to 2.5 times of average monthly payroll. All or a portion of these loans may be forgivable. Borrowers are eligible for loan forgiveness equal to the sum spent on qualifying expenses during the 8 week period after the loan is originated. Qualifying expenses are all payroll related costs (wages, payroll taxes and benefits including retirement), rent or mortgage payments and utilities.

To qualify for forgiveness, employers need to maintain their level of employment before the crisis started or else the amount of forgiveness is reduced. Because many businesses have already begun to furlough employees, there is a special provision that allows them to qualify for forgiveness by hiring those employees back.

These loans are given without personal guarantees and your current cash position or other assets are not a determining factor. Instead, you simply need to make a number of good faith certifications including that your organization needs this loan to support your ongoing operation due to the current economic conditions.

The current expectation is that by Friday April 3rd nearly all banks will have received the guidelines on this program so the process can begin. This is a quickly changing set of circumstances and we will continue to update you as things become clearer.



There are other provisions of the CARES Act that could also be applicable to your company. As your business advisor, we are ready to assist you as you maneuver through this process as well as any other decisions you are encountering in this environment. Do not hesitate to reach out to us.