By Desiree Homer
The Coronavirus Aid, Relief and Economic Security (CARES) Act has been signed, unleashing $2 trillion in funding across various individual, business, and state-based financial relief efforts. While there are several models carving out the budgets and allocation of funds for each, there are a few key benefits that may directly apply to dealerships during this uncertain time. Of the total budget, $367 billion applies directly to the loan and grant programs for small businesses. For dealers who employ 500 or fewer employees, here’s how this relief can apply to your operations.
Small Business Administration Loans
For any business already using SBA loans, there is $17 billion allocated to help those businesses cover up to six months of operations. For dealers who may consider applying for the other $300+ billion set aside in the form of forgivable loans, those applications can be levied with the SBA immediately. Those businesses that qualify can receive up to ten million each. However, only those funds applied specifically to rent/mortgage, payroll to keep employees funded, health benefits, or utilities are eligible for debt forgiveness. Any loans not forgiven, would then be converted to a term loan for ten years, with interest set not to exceed four percent.
Paycheck Protection Loan Program (PPP)
The Paycheck Protection Loan Program (PPP) is designed to help businesses keep employees on the payroll, even if they’re not reporting for work. The funds are available in the form of loans, not to exceed the company’s past monthly payroll amount by two and a half times the value, or a maximum of $10 million, whichever is less. These loans are designed to eliminate, and retention credits, cited by previous Emergency Medical leave, and also defers payroll tax payment, as per the CARES Act. There are no guarantee or collateral requirements for these loans, and dealers may determine this channel is ideal in keeping staff onboard during a shutdown.
The amount allocated for augmenting unemployment benefits at the state level is subject to adjustment, based on the number of individuals who file and state-by-state need. Eligible individuals who may be currently furloughed, as well as contract workers, are getting up to a $600 per week boost in unemployment payments. These payments are allocated to extend through a period of four months. In your dealership, you may have key staff members who fall under this furloughed status. Encourage them to apply for unemployment benefits under these new COVID-19 guidelines.
Who Gets a Piece of the Pie?
Hospitals and healthcare providers will be given over $130 billion of the budget, to help offset the increased present costs of care, along with the deficit to the industry, due to lack of other revenue-generating procedures. The airlines are getting $58 billion. State and local governments, also drained of financial resources due to the costs of containing and treating Coronavirus patients, will be getting their piece of $150 billion. Corporate America will have a slush fund of $500 billion in available loans, and the auto industry may be included in this segment.
Of the $2 trillion available in the CARES Act, dealerships do have operational and financial resources to consider. Depending on the size of your store, the number of employees, and the overall impact of the Coronavirus in your market, you can leverage some of these programs to help you take care of your business and your employees in the months to come.