A Guide To The CARES Act For Small Businesses

image of a business owner with his arms folded across his chest with text explaining honor credit union has a guide to the new CARES Act for small business owners

Dear Members,

On March 27, 2020, The Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law as a relief measure for small businesses and their employees who have been adversely impacted by the current public health crisis. A key provision of this legislation is the Paycheck Protection Program, a $350 billion emergency lending program designed to provide small businesses with loans to help cover their operating expenses and maintain their workforce during a temporary period of severe market disruption.

As an Approved Lender through the U.S. Small Business Association (SBA), Honor Credit Union as of April 3rd, is now able to offer the small business loans authorized under the Paycheck Protection Program. We are anxiously awaiting guidance from the SBA regarding when and how we can begin administering these loans for our business members. Today we learned that the SBA has until April 10th to deliver this guidance to lenders, although we are hopeful that it will happen much sooner.

— UPDATE (4/22/20) —

As of 5:00pm on Wednesday, April 22nd, Honor Credit Union is no longer accepting additional applications for the Paycheck Protection Program. While additional funding is expected to become available through the federal government within the coming days, the expectation is that these funds will also be exhausted extremely quickly, and any new loan applications submitted between now and the time funds are released will be unable to provide the required documentation.

We’re continuing to monitor the ever-evolving changes surrounding Paycheck Protection Program loans and other small business financial assistance options and will provide further updates as they become available.

In the meantime, our team is diligently working through the details of this initiative and will be ready to serve as your partner when authorization is provided to begin lending. We will continue to share updates with you as soon as more information becomes available. Here is what we know so far:

Who is eligible?

Any business in operation on February 15, 2020 with no more than 500 employees (or one that meets the SBA’s size standard) may be eligible, including:

  • Small businesses
  • 501(c)(3) nonprofit organizations
  • Sole proprietorships,
  • Independent contractors
  • Self-employed individuals
  • Tribal businesses
  • 501(c)(19) Veterans Organizations

What are the benefits of the Payroll Protection Program?

  • A loan up to 2.5X your business’s average monthly payroll up to $10 million
  • Fixed rate of 1.00% APR
  • No payments for the first 6-12 months, then a 10-year term loan
  • Up to 100% of the loan can potentially be forgiven with approval

How can the funds be used?

  • Payroll expenses
  • Employee salaries
  • Mortgage interest
  • Rent and Utilities

Payroll costs do not include:

  • Compensation in excess of an annual salary of $100,000 as prorated for the covered period
  • Compensation for employees not residing in the U.S.
  • Qualified family leave wages for which a credit is allowed under the Families First Coronavirus Response Act

What is the application process?

As of 5:00pm on Wednesday, April 22nd, Honor Credit Union is no longer accepting additional applications for the Paycheck Protection Program. While additional funding is expected to become available through the federal government within the coming days, the expectation is that these funds will also be exhausted extremely quickly, and any new loan applications submitted between now and the time funds are released will be unable to provide the required documentation.

We’re continuing to monitor the ever-evolving changes surrounding Paycheck Protection Program loans and other small business financial assistance options and will provide further updates as they become available.

Can the Paycheck Protection Loan turn into a forgivable grant?

A major benefit that comes with this program is the ability to have a portion or all of your Paycheck Protection loan forgiven and turned into a grant. The forgiveness program is designed to support employment and comes with requirements on maintaining a specific level of employees and compensation during the allotted time period. Rest assured that we will share details of the forgiveness program once more information is provided by the SBA.

We’re Here For You And Your Business

While the program details (as outlined above) are subject to change at any time until final guidance is delivered, we remain committed to serving as your resource for all federal relief efforts and your partner in maintaining and protecting your small business. If you have any questions regarding financial relief options during this time, please give us a call at 800.442.2800.

Thanks for being a member.

scott defries signature

Scott DeFries
VP of Business Services

Helpful Resources

Financial Relief Package

If you, or your business have been financially impacted by COVID-19, we have a number of ways to help relieve financial stress during this difficult time.

Economic Injury Disaster Loan

Business owners are also now eligible to apply for long-term, low-interest Economic Injury Disaster Loans through the U.S. Small Business Association.