Information on available federal assistance
National Automobile Club recognizes the hard work and sacrifices that towing companies are making to provide emergency services during the Coronavirus pandemic. As you work tirelessly to provide these essential services, you may not have had time to follow updates on available federal assistance. In particular, the Small Business Administration (SBA) and CARES Act could potentially benefit your towing business. For this reason, we would like to help by sharing information and resources regarding financial support through the SBA and CARES Act.
Many small businesses are now eligible for disaster relief loans from the Small Business Administration.
The Economic Injury Disaster Loan (EIDL) program is provided directly through the SBA and intended to provide quick relief, offering advance grants of up to $10,000. The borrower will not be required to pay back this advanced grant. The deadline to apply is December 30, 2020.
To begin applying for the EIDL program, click the link below to be directed to the SBA's website.
The CARES Act
To receive financial assistance through the CARES Act, you must apply through a bank or other lender by June 30, 2020. However, the funds earmarked for this program are expected to be distributed to eligible recipients very quickly, and some applicants may be turned away. As of April 7th, the Treasury Department said it would request at least another $200 billion in additional funding.
Some key highlights of the CARES Act:
Paycheck Protection Program (PPP)
Loans will be available in a maximum amount generally equal to 2.5 times the borrower’s average monthly payroll costs (excluding compensation of any employee in excess of $100,000) incurred during the one year period before the date on which the PPP loan is made, up to a cap of $10 million.
Many of the standard SBA lending requirements are waived, including the requirement of collateral or a personal guarantee.
The interest rate may not exceed 4%.
Fees, interest and amortization payments are deferred for at least six months, and up to one year.
There is no prepayment penalty on PPP loans.
Loan proceeds may be used for payroll, health care benefits, rent, mortgage interest payments, utilities, and interest on other debt obligations incurred before February 15, 2020.
Borrowers will be able to request loan forgiveness in an amount equal to
-payroll costs, interest on mortgages entered into before February 15, 2020
-rent obligations under leases entered into before February 15, 2020
-utility payments for services beginning before February 15, 2020
In each case incurred or paid during the eight weeks after the loan date (the “covered period”). The forgiveness amount will be reduced on a prorated basis for layoffs and certain wage reductions during the covered period.
Tax Relief provided by CARES Act
An employee retention tax credit for employers subject to full or partial suspension of business due to COVID-19
The ability to delay payment of employer payroll taxes
Modifications for rules around net operating losses
Modifications for rules around corporate AMT (alternative minimum tax) credits
A temporary increase in the limitation on interest deductions imposed by the Tax Cuts and Jobs Act
All materials have been prepared for general information purposes only to permit you to learn more about the SBA, CARES ACT and how it may potentially benefit your company. The information presented is not legal or financial advice, is not to be acted on as such, may not be current and is subject to change without notice. Do not contact us with questions regarding the information provided.