5 Ways You Can Get Financial Benefits from COVID-19 Stimulus Bill
By Edward Brunicardi
*** This article is sponsored by the Jubilee Initiative for Financial Inclusion (JIFFI) and is the first installment of a three-part series intended to inform South Bend residents about the financial resources available to them during the COVID-19 emergency. ***
When Governor Eric Holcomb announced this past Friday that he would be extending Indiana’s state of emergency to May 3rd, it was clear that South Bend residents would need to brace for further uncertainty. Like so many cities across the nation, the question of if our businesses will stay afloat and how our families will be kept secure has risen amidst a crisis that has already left 146,000 Hoosiers unemployed.
Fortunately, numerous community organizations and officials spanning all levels of government are stepping up to offer financial resources to those impacted by COVID-19. The biggest source of aid thus far comes in the form of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Providing nearly $2.2 trillion in relief funding, the legislation offers countless avenues of financial support for small business owners, self-employed individuals, and unemployed workers. If you fall one into one of these groups, you may be in a position to benefit from one or more of the five CARES programs detailed below:
Paycheck Protection Plan
The Paycheck Protection Plan (PPP) is a government loan designed to give small businesses and self-employed individuals an incentive to keep workers on their payroll. While your business must employ less than 500 individuals to qualify, the maximum loan offered through the PPP equates to 2.5 times the average amount your employer allocated towards monthly salaries over the past 12 months.
For example, let’s say an employer allocated $120,000 towards employee salaries in the past year. This means the average monthly salary for the business is calculated to be $10,000, and its employer will be eligible for a maximum loan amount of $25,000. As long as the loan is used to cover rent, mortgage interest, or utilities, and payroll costs make up 75% of the loan, the entire loan, including interest, will be forgiven. One should also note that people who are self-employed are also eligible for this loan.
“You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.” This program will only be available through June 30th, 2020, so be sure to let your employer know about this program soon if you think your business is eligible. For more information, please see the U.S. Small Business Administration’s (SBA) website here.
Economic Injury Disaster Loan
The other loan available to small businesses and self-employed individuals is the Economic Injury Disaster Loan (EIDL). While the SBA will ultimately be determining the size of this loan amount, the EIDL is unique in the sense that you can request a loan advance of $10,000 before the SBA even approves your loan. This means that even if you apply for an EIDL and the SBA rejects you, if you requested the advance before the rejection occurred, you are under no obligation to pay that $10,000 back. Essentially, it’s a guaranteed grant for your business!
The application for the EIDL can be found here, and do not worry if you make an error. Every applicant will be assigned a loan officer that will assist you within a few days of your submission to ensure that no mistakes are made.
Small Business Administration’s 7(a) Loan
A third crucial resource CARES offers for small businesses is the Small Business Administration’s 7(a) program (SBA-7A Loan). While this loan requires much more paperwork than the others, your business could qualify for up to $5,000,000. Moreover, if you are able to receive this loan, the SBA guarantees to pay off the interest and principal of the loan for up to six months. Only after this period will you become responsible for paying off the loan. All applications for the SBA-7A Loan are conducted through your bank, so contact them soon to find out if your business is eligible!
Government Rebate Check
While the previous three programs are only available to businesses, this CARES program has a line of tax credit directly available for individuals. Specifically, individuals making less than $75,000 in 2019 are eligible to receive $1,200 that will be delivered directly to your address. Married couples making less than $150,000 will receive a check for $2,400. You will also receive an additional $500 for every child that appears as a dependent on your tax return.
As long as you filed a 2018 or 2019 tax return, there is nothing you need to do for this check to be sent directly to your home address, as the IRS will already have your information on file. However, even if you have not filed a tax return or are not required to do so because of your income level, it is a good idea to file anyways so the IRS can know what address to send the check to. You have until July 15th to file your 2019 tax return, as the government has extended the deadline from its original date in April.
Note: If in 2018 or 2019 you are single and made more than $75,000, but will make less than that amount this year, be sure to fill out your 2020 tax return next year. Even in this situation, you will still be eligible to receive the check! However, in all cases, you must have a Social Security number to qualify.
Unemployment Insurance Claims
Prior to the CARES Act, you would only be able to apply for unemployment benefits if you lost your job under an employer. However, subcontractors, self-employed individuals, and partially-employed people can now receive these benefits as well! CARES also contains several additional provisions that qualify someone for unemployment benefits. These include, but are not limited to: those who have been diagnosed with COVID-19, those who have a household member diagnosed with COVID-19, those who were supposed to start a job but now can’t because of COVID-19, and those who are the primary caregiver of a child unable to attend school because of COVID-19. If you are residing in the state of Indiana and meet any one of these qualifications, please see the instructions for making an unemployment claim here.
Edward Brunicardi is the Vice President of the Financial Empowerment Program at the Jubilee Initiative for Financial Inclusion — a South Bend based microfinance organization committed to offering financial literacy resources and low-interest loans to locals in need. If you would like to learn more about our services or apply for a loan, please visit us at our website here or call us at (574) 400-5258.
