• Jeran Van Alfen, CFP®

Covid-19 CARES Act Update: How to Get Money for Your Business

The Covid-19 global health crisis has had an especially hard impact on small businesses. With the passing of the CARES Act and actions from the Department of Treasury, there are resources available to you as a small business owner. Here are some important items to know if you need cash for operations:



Paycheck Protection Program

This program is offered through SBA 7(a) institutions and the program began taking applications on April 3, 2020. You may have already received communication from your bank or financial institution that they are ready to be a resource for you. This is a partially forgivable loan with very generous terms. Here are some key points to know:


  • Loans must be applied for by June 30, 2020

  • Businesses (including sole proprietorships) with less than 500 employees are eligible for the program

  • Loans provide up to 2.5 times the average monthly payroll costs of your previous year

  • Loan proceeds can be used to pay for: Payroll costs, Group health insurance premiums and other healthcare costs, salaries/commissions, rent, mortgage interest, utilities,

  • The amount of the loan eligible for forgiveness is the amount spent during the first 8 weeks on payroll costs, rent, utilities, healthcare premiums and costs.

  • In order for the loan to be forgiven, the business must maintain the same number of employees for the 8-week period after receiving the loan.

  • Any debt forgiven, is not included in taxable income for the year

  • Loan interest rates are a maximum of 4% and payments will be deferred for a period of no less than 6 months and no longer than 1 year. The maximum loan term is 10 years.

Economic Injury Disaster Loan

The CARES Act has expanded access the Small Business Administration’s Economic Injury Disaster Loan (EIDL) program. The new provisions allow startups, co-ops, ESOPS, sole proprietors, and independent contractors to have access to the program. Here are some key items to know regarding this program:


  • The SBA is required to waive many previous qualifications to apply for these loans through December 31, 2020. This includes personal guarantees on loans below $200,000.

  • Loan Advance does not have to be repaid: Applicants can request a $10,000 advance payment. This advance is delivered in 3 days from the application being successfully completed. The advance does not need to be repaid even if the loan is declined.

Deferral of Payroll Taxes

Employers are eligible to defer payroll taxes, with the exception of businesses who have had debt forgiven from the SBA under the CARES Act.


50% of the payroll taxes that would be due this year can be deferred until December 31, 2021. The other 50% is due December 31, 2022.

Net Operating Loss Rules are adjusted:

Any Net Operating Loss from 2018, 2019, and 2020 can now be carried back 5 years. This would provide businesses to amend taxes owed from previous years and claim a refund to provide current liquidity.


The CARES Act also changes a rule that was put in place by the Tax Cuts and Jobs Act. Net Operating Losses can offset up to 100% of taxable income for 2018, 2019 and 2020 instead of the former 80% limit.


We are Here to Assist You

Please let us know how we can assist you in planning for your business during this economic crisis.

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Centered Financial LLC

701 Palomar Airport Road

Ste. 300

Carlsbad, CA 92011

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