Are you a small business owner or tech start-up trying to survive during the coronavirus pandemic? Do you wonder, “What is the stimulus package?”
Continue reading this article to learn more about the CARES ACT. You will learn how it can assist your California business.
What Is the CARES ACT?
The Coronavirus Aid, Relief, and Economic Security Act (CARES ACT) passed on March 31, 2020. The act provides emergency help to those affected by the pandemic. It includes individuals, families, and businesses.
Does the Stimulus Package Include Start-ups and Small Businesses?
The $2 trillion CARES ACT includes help for small business and tech startups. It includes employees, founders, and business owners.
The government is developing laws and regulations to implement this act. Tech startups and small businesses need to watch for changes.
CARES ACT Provisions to Help Small Businesses
This stimulus package aims to support America’s economy. It includes specific provisions for small businesses.
Businesses with fewer than 500 employees are eligible for loan programs. The CARES ACT’s goal is to decrease layoffs.
Small businesses must use specific private financial institutions. They must be in the Small Business Administration (SBA) lending network.
The Act also includes employer tax credits up to $10,000. You can receive a 50% refundable payroll tax credit for wages paid during the pandemic.
The credit applies to any business forced to close during the crisis. It also includes those with a decrease in gross receipts of 50% or more.
Businesses with over 100 workers, who retain employees when they cannot work, can claim the credit. This credit also applies to all wages for business with 100 or fewer employees.
What is the Stimulus Program Purpose?
The covered loan period is March 1, 2020, to December 31, 2020. Eligible entities include private nonprofit or public nonprofit organizations. They must have fewer than 500 employees.
Ineligible nonprofit businesses include those receiving payments from Title XIX of the Social Security Act. Exclusions also apply for those under a waiver of such plan.
What Can You Use the Loan For?
Those who qualify for a loan have restrictions on the money’s use. Approved expenditures include:
- Paid sick, medical, or family leave
- Payments for group health care benefits during these types of leave
- Employee salaries
- Mortgage payments
- Rent and lease payment
- Utilities
- Insurance payment
- Debt obligations incurred before the covered period
Approved lenders must defer all repayment of relief loans for not more than 1 year.
Special Considerations for VC Funds and Other Investors
Are you a venture capital (VC) fund, investor, accelerator, or incubator? Do you focus on ensuring portfolio companies comply with new laws and regulations? Are you tasked with making sure businesses receive available government support?
In these stressful days, it is vital to remain legally compliant. The California Consumer Privacy Act (CCPA) rules remain in place. Tech start-ups must ensure they meet CCPA regulations.
The pandemic has increased media attention on businesses. The public is less likely to forgiving privacy breaches. Thus, your business cannot afford any violations.
Is Your Small Business Struggling During the Pandemic?
Help is available for small business or tech start-ups affected by the pandemic. This article has provided answers to the question, “What is the stimulus?” The good news is that you do not have to navigate this changing climate alone.
Grellas Shah LLP is a full-service boutique law firm. We specialize in tech startups, VCs, angel funding, intellectual property protection, licensing and more. Our experts can guide your business to optimize your relief benefits related to the pandemic.
Contact us today to ask questions and learn more about our services.