The “Coronavirus Aid, Relief, and Economic Security Act” or “CARES Act” was recently introduced in the United States Senate to address the economic impacts of the COVID-19 outbreak. The CARES Act covers significant ground, providing relief related to taxes, education, small businesses, and healthcare.
If passed, the CARES Act would provide small businesses with funding for forgivable loans to the extent the loan funds are used for certain payroll expenses. However, the Act also specifically states that a borrower who receives an SBA Loan (assistance under section 7(b)(2) of the Small Business Act, 15 U.S.C. 636(b)(2)) related to COVID-19 for purposes of paying payroll and providing payroll support shall not be eligible for a forgivable loan provided for in the CARES Act.
The CARES Act has not yet been voted into law. If this law passes, a CARES Act Loan may be better for some than a traditional SBA Loan. As a result, it makes sense to wait to see what happens before closing on a more traditional SBA Loan.
BHBM will continue to monitor the situation as it develops.
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