“Don’t ever let your business get ahead of the financial side of your business. Accounting, accounting, accounting. Know your numbers.” – Tilman J. Fertitta
The world is cautiously emerging from the devasting impact of the COVID-19 pandemic and resultant global economic shutdown. Countries like the USA, New Zealand, Australia, Germany, and the UK are rebooting all or part of their economies to mitigate the financial losses caused by the need to lock down and stay at home to prevent the virus from spreading rampantly through the world.
The good news is that May 2020 US unemployment claims dropped as a result of 2.5 million jobs opening up. However, unemployment figures still sit at 20% with tens of millions of people still out of work.
In an attempt to mitigate the devastating financial consequences of the lockdown order, the US government has also signed several economic acts into places like the Coronavirus Aid, Relief, and Economic Security (CARES) act and the Family First Coronavirus Response (FFCR) act.
What is the CARES act?
Investopedia.com describes the CARES act as a $2 trillion stimulus bill that is designed to “blunt the impact of an economic downturn set in motion by the global coronavirus pandemic.” This act was signed into law on 27 March 2020. And its primary function, as crafted by policymakers, is to dedicate “government funding to support large and small businesses, industries, individuals and families, gig workers and independent contractors, and hospitals.
This act is a comprehensive piece of legislation and includes the following:
- Unemployment benefits for people furloughed directly as a consequence of COVID-19.
- A loan and grant program for small businesses to the value of $367 billion.
- $25billion cash grants for airlines, $5 billion for air cargo operations, and $3 billion for third-party contractors working in the airline industry like caterers and cleaners.
- Direct payments to families who earn less than $75 000 per annum.
Navigating your way through the CARES act
This description of the CARES act is nothing more than a brief summary. Therefore, it is essential to hire a professional like an Atlanta small business bookkeeping provider to help you apply the relevant aspects to your small business.
It is also important to make sure that you have an understanding of the basic elements of the CARES act. Therefore, here are a few elements that apply to the small business owner.
The Payment Protection Program
This is one of the most talked-about aspects of the CARES act.
$349 billion is to be used to help small businesses maintain their payroll and some overheads during the pandemic. The stated aim is to keep employees paid and employed, not laid off or furloughed, during the pandemic. The good news for self-employed people is that this part of the act applies to them as well.
Economic injury disaster loans
Small businesses that are directly affected by the COVID-19 pandemic can apply for this loan. The first $10 000 of the loan does not have to be repaid. And, you can borrow up to $200 000 without having to provide a personal guarantee.