CARES Stimulus Act 2020: information for individuals, small businesses, and independent contractors.
“Coronavirus Aid, Relief, and Economic Security Act”
I have assimilated information on the CARES Stimulus Act 2020 that could be of help to you. If you are a small business or independent contractor, please read!
DISCLAIMER: I do not purport to be an authority on any information below. You are advised to check with an attorney, accountant, etc. and to for yourself the accuracy and benefit of suggestions offered here.
This is for government backed mortgages (Fannie Mae, Freddy Mac, FHA, VA, USDA):
- Government-backed mortgage forbearance
- Up to 360-day payment forbearance
- No proof of hardship
- No additional fees
- No interest or penalties assessed
- Exception is for vacant or abandoned properties
Note that the missed payments are not forgiven. The loan servicer must continue to make the payments the mortgagee misses. Each lender will decide how you repay missed payments. My bank offered me three months of deferred payments. But all the deferred payments are due at the end of the three months! They might “work with me then” on a plan for making the missed payments. Word is that they may be willing to tack the missed payments onto the end of the mortgage. Try to negotiate!
If your loan is with a credit union or is held in-house at your bank, call directly to see what they will offer you. They do not fall under the Mortgage Forbearance in the stimulus plan.
Small Business and Independent Contractors
- Independent contractors
There are a few interesting opportunities for you!
- The SBA (Small Business Association) $10,000 grant. As I understand it, this is a “forgivable” loan. Application is an easy process on SBA.gov – be sure to click on the YELLOW bar at the top of the website to apply. However, it must be documented to be used for salary or cost of running your business. You have until December 31, 2020 to use the funds accordingly.
- After you are approved for the 10K grant, you will receive an offer of a SBA business loan with deferred payments and a reasonable interest rate.
- The Payroll Protection Plan (PPP). This is a potentially forgivable loan intended to help employers keep employees working.
- PPP can be used only for payroll and possibly rent and utilities.
- It covers the cost of 8 weeks of payroll and must be used and documented by June 30th.
- All or a portion of the loan is forgiven if payroll levels are maintained.
- The PPP is administered by local banks. You can find a list of participating institutions here. This list may not be complete, so call your bank to inquire.
- Many banks have not finalized the loan, so it is not available yet. Keep checking with your bank.
Note: you cannot “double dip” with the 10k grant and the PPP. You can potentially use the PPP loan and then use the SBA grant later. You cannot use them simultaneously for the same payroll period.
- You can make an early withdrawal of less than $100,000 with no penalty due this year.
- There is not a penalty if you recontribute the funds within 3 years
- The tax penalty will be pro-rated over 3 years to soften the blow, if you do not recontribute the funds,
- You are not required to withdraw funds this year if you are over 70 1/2
In conclusion, there is some great aid out there under the CARES Stimulus Act 2020. You should act quickly.