This morning we hosted a conference call about the CARES Act legislation and what options are available for small businesses affected by COVID 19.

You can listen to the call here:


The opinions expressed in this recording are for general information purposes and are not intended to be, and should not be taken as, legal advice.  Further, the information discussed in this recording is rapidly changing.  Please consult your attorney, banker, accountant and/or other trusted advisers for legal and/or business advice.

How does the CARES Act impact current Unemployment Law?

Corena Norris-McCluney, Labor & Employment Counsel, Kilpatrick, Townsend & Stockton, LLP.
  • Provides incentives to employers to retain their employees
  • Provides displaced workers $350/week (NC cap) plus $600/week (additional payment) for 4 months
  • Includes workers with temporary reduction in hours and pay
  • Adds incentives for employers (creates a payroll tax credit for full or partial shutdown)
  • Permits employees to leverage their 401K, employees can withdraw early without penalty but would still pay taxes on the amount withdrawn.
  • States are still waiting on guidance for how they will administer the expanded unemployment benefits. File your claims now, you may need to wait for retroactive payments.

SBA Loans: Payroll Protection Program vs. Economic Injury Disaster Relief

Will Joyner, Partner, Kilpatrick, Townsend, & Stockton, LLP

Paycheck Protection Program (PPP)

  • $349 billion has been authorized
  • Loans are from a third party lender- SBA approved financial institutions
  • Forgivable loans to incentivize employers to retain workers.
  • Expands small business eligibility. The Act opens up the eligibility to all businesses with 500 or fewer employees. In some cases it could be more employees based on certain industries.
  • Hotels and restaurants with 500 or fewer employees per location will also qualify.
  • SBA counts employees across all affiliated businesses (for example private equity firms). Rules are waived for hotels, restaurants, franchises, and SBICs
  • Loan terms: up to $10 milliion – 2.5 times your average monthly payroll over the last year.
  • Ten years, interest rate cannot exceed 4 percent, interest is deferred for 1 year. No collateral or personal guarantee is required.
  • Payments must be used for payroll, operating costs
  • Forgivable loan – the loan amounts are eligible to be forgiven if you spend the proceeds during the 8 weeks after the loan is made on: payroll costs, interest on existing mortgage obligation, rent payments, or existing utility payments.
  • Any amount of the loan used for other reasons would need to be paid per the terms above.
  • Employers cannot reduce salaries by more than 25% for those making less than 100,000. If you rehire or restore compensation by June 30 you can still qualify for forgiveness.
  • The amount of the loan that is forgiven does not qualify as gross income to the employer.

Economic Injury Disaster Loan (EIDL)

  • Loans are administered directly from the SBA
  • New streamlined application process online.
  • Nonprofits are eligible
  • Amount of the loan is determined by your amount of economic injury.
  • Capped at 2 million
  • Loan term 30 years, up to 3.75 small businesses, 2.75 for nonprofits.
  • Loans over 25 k must be secured by collateral.
  • You can get a 10k advance on the loan within 3 days. Even if your application is denied you don’t have to repay the advance.

Important Links:

Paycheck Protection Program

  • For a top-line overview of the program CLICK HERE
  • If you’re a lender, more information can be found HERE
  • If you’re a borrower, more information can be found HERE
  • The application for borrowers can be found HERE

Economic Injury Disaster Loans – SBA Small Business Loans

  • Information and link to the application can be found HERE.
Find and download a copy of the presentation below.