It seems as though in just a matter of a few weeks, COVID-19 changed everything. It’s true. But, business owners are taking the hardest hit. Not only are they trying to help take care of their business and their employees, but learn how to stay afloat. Even restaurant owners and grocery stores are experiencing the effect of people trying to save money. It’s rough for everyone.
COVID-19 has brought options, though, in that business owners and finance managers can take control over the mounting debt and lost income. The options are through the Care Act, a new legal term, Force Majeure, and access to new forgivable loans. Get with a business law attorney now to discuss the options that could be accessible for you.
Understanding the New Care Package Impact on Small Businesses
Two trillion dollars will soon hit the American economy, and what will that do for small businesses that are shut down? Although many think that this could be the big sweep of relief, it’s something to consider with caution. About $350 billion of the Care Package is for small business loans. That’s right, a loan, under the right conditions.
The impact on the small business might help some customers come into the business. That’s the idea of the package that it should stimulate the economy. However, many worry that customers instead, will save and continue to scrimp. That means that you need to ensure that your business can survive with minimal income.
What is the Forgivable Loan Option?
The rumors are true. The loan program is something that comes with the chance of the government forgiving 100% of it. Now, you can apply for a loan if you have fewer than 500 employees. You must get your application in before June 30th, and honestly, the sooner, the better.
The forgivable nature of the loan depends on how you use your loan. No less than 75% of the loan must go to payroll costs. However, there is a specific language to bar against the people cutting down their payroll costs to lower the demand on the loan.
Now, you can arrange for a loan just for payroll that can cover two and a half months of your payroll costs. The remainder of the loan can go to anything that you want, but many are choosing to use it to pay their vendors and stay in good graces with suppliers.
What is Force Majeure?
Although this isn’t a new term, it is the first time it’s been used on this scale or to this degree in business law. Force Majeure is a term that applies basically when you have some act of God coming into play. These are usually in some contracts, and the government is using it as a blanket to help people go through their business dealings during this time.
Some examples of Force Majeure can include getting out of certain updates, amortizing assets differently than usual, and even paying certain fees. These clauses are helping many people navigate the unforeseen. For example, one business owner who has a franchise is getting to go through and amortize a massive update he had to do on the building this year.
What Can You Do To Stay Open, Legally?
You can consider getting in on these small business loans. It could be advantageous for someone who only needs help covering payroll and can dedicate 75% directly to payroll costs. It can also ease the worry of having to pay your employees. But, it’s critical that you use these only as directed to cash in on that 100% forgivable caveat.
Should You Contact a Local Connecticut Business Attorney
Whenever you have questions around business matters, you should always consult an attorney. All the new acts, loan options, and ways of handling business through COVID-19 are difficult to understand. It is like most things with business law. It is almost intentionally phrased in a way that makes it impossible for small business owners to handle alone. To get into contact with a reliable business attorney, contact Aeton Partners for business law.
Our attorneys will work with you to help understand how these new acts could impact your business. You may want to explore your options before making any decisions and to do that. You need someone to decipher these acts. Contact Aeton Partners for help with anything to do with your business and understand how you can grab hold of opportunities that may not be available for long.