On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security - CARES Act was passed, offering relief for taxpayers impacted by the coronavirus (COVID-19). CARES was added to the legislation. CARES is the third settlement of COVID-19 funding from the federal government.
Division A of the new legislation comprises parts intended to support companies impacted by the emerging pandemic financially. Temporary changes to 7(a) of the SBA Loan Program would concentrate on direct financial aid.
The Act provides repayment of a refund of $1,200, plus $500 per qualified child for eligible persons ($2,400, for Joint Filers). The refund starts to decline if the person's adjusted gross income (AGI) is greater than $75,000 ($150,000 for joint filers, and $112,500 for the head of household filers, respectively). For people without eligible children, the credit shall be entirely phased out if their AGI exceeds $99,000 ($198,000 for joint applicants and $136,500 for household filer managers).
No non-resident immigrants, who may be claimed to be relying on another person's returns, assets, or trusts, are qualifying persons. A valid social security number must all be issued for qualified persons and qualifying children. Every partner is considered to have earned one-half of the benefit for married taxpayers who submitted their most current financial records (2018 or 2019) yet registered independently by 2020.
CARES Act for SBA:
SBA Loan Application (SBA Form 1919) –
This form seeks to collect data on the applicant and his directors, on the credit application, debt, existing or previous government funding, and some other subjects. In addition, the latest details shall be collected. Please note that a specific request for the updated Program may be needed.
Assessment of Personal Background and Financial Statement –
The SBA also needs you to fill out the following documents to determine your eligibility.
Business Financial Statements –
- Statement of Personal History (SBA Form 912)
- Personal Financial Statement (SBA Form 413).
Organize and include the following financial reports to endorse your application and show the ability to repay:
Profit and Loss (P&L) Statement –
The P&L (profits and loss) report is a financial statement summarizing sales, costs, and other costs usually accumulated in the fiscal quarter or year within a given period. This must be up to date within 180 days from your submission. Additional schedules of the last three fiscal years are also to be included.
Projected Financial Statements –
The expected financial reports consider past economic patterns, conditions of the economy, potential adjustments, and plans for management in the future. Provide a comprehensive one-year income and finance forecast and have a written account of how you intend to do so.
Ownership and Affiliations –
Please provide a list of all subsidiary companies' names and addresses, covering matters of command and other issues that may be associated with you through shareholding, franchise, and potential merger.
Business Certificate/License –
Your primary license or business certificate. If you are a corporation, stamp the SBA loan form with your corporate seal.
Loan Application History –
In this section, you need to include records of any prior loans you may have requested.
Income Tax Returns –
In this section, you need to include the company managers' signed private and corporation tax returns for the past three years.
Business Overview and History –
Specify a short history and difficulties of the business. Include an overview of the reason and type of the SBA loan is needed.
CARES Act and EIDL:
Small businesses in all United States, Washington D.C., and regions in response to the coronavirus disease outbreak (COVID 19), can request an allowance of up to $ 10,000 from the Economic Injury Disaster Loan. The progress would bring economic relief to companies with transient sales losses. After successful submission, funds will be made accessible. No repayment is expected for this loan advance.
The SBA's Economic Injury Disaster Loan provides essential financial aid for small enterprises to resolve the temporary loss of income caused by the COVID-19 pandemic. The advance loan Economic Injury Catastrophe Loan funds will be made available and will not have to be reimbursed within days of a successful application.