Along with our custom software business, Inventive Works, we also have Inventive Ventures, an incubator for small businesses – and we’ve heard some confusion over the recent government financial announcements.
Amongst the uncertainty of the ongoing COVID crisis, it was certainly exciting news last week when it was announced that on March 25, the CARES Act was approved by the Senate, and passed into law on March 27.
This will make a huge difference to small businesses across the US – under the CARES Act, around $350 billion will be available to incentivize small businesses to keep their staff intact, and reduce layoffs.
This is called the Paycheck Protection Program – just one piece of the Act.
In a nutshell, banks will be supported to offer forgivable loans to businesses employing under 500 people, to be used to cover payroll, health care, mortgage interest or rent, utilities, and debt interest.
Did I say Forgivable? Yep.. as in “considered canceled”. If the business uses the loan appropriately and doesn’t lay off any employees, it can have the debt forgiven completely. The forgiveness will be reduced by the number of people laid off, or whose compensation was reduced.
In other words, do right by your employees, and you’ll get help financially.
There’s a lot of small print, but this is the gist of it. This is not the same as an SBA program, for example, their Disaster Relief. This new program is available directly through your bank, so step one is for you to reach out to your bank and ask to be put on the waiting list.
Most expect to hear more details about this program later this week if all goes to plan.
P.S. Small business owners rejoice – as an added bonus, these loans will likely not require any personal guarantees or collateral!