Cash Now for Self-Employed and Small Businesses under the CARES Act

For the past few weeks we here at Alternative CPA & Consulting have been working long hours, pouring over pages and pages of newly-enacted law. Our goal is to constantly find what new strategies will work best for our clients to keep their businesses not only running, but thriving, in the current economy.

The two biggest challenges faced by small businesses right now are cash flow and payroll. Fortunately the U.S. Federal Government has been hard at work enacting stimulus bills.


The first piece of great news in all of this is that small businesses, sole proprietorships, and independent contractors now have clear ways to ensure that they have cash coming in. This is thanks to a provision in the CARES act entitled “Keeping American Workers Paid and Employed Act”, which establishes a “Paycheck Protection Program” and the “Economic Injury Disaster Loan“.


This portion of the legislation amends the Small Business Act to enable small businesses with less than 500 employees (along with others, under special circumstances), sole proprietors, and independent contractors to receive loans of up to $10,000,000 or 2 1/2 times the average monthly payroll costs (whichever is less), at no more than 4% interest. No payment is due on these loans for a period of six months to one year.

In order to qualify, the small business, sole proprietor, or independent contractor needs to have been operating their current business prior to February 15, 2020, and:

  • had employees who had been paid and for whom payroll taxes were withheld, or
  • had independent contractors who would receive a 1099-MISC

The loan covers amounts spent on these items:

  • Payroll Costs including payments to independent contractors
  • Group health, sick leave, FMLA, and insurance premium costs
  • Employee salaries and commissions
  • Mortgage interest (but not principal)
  • Rents
  • Utilities
  • Interest on debts incurred before the declaration of the COVID-19 emergency

When the borrower spends the loan amount on the items listed above during the first 8 weeks after the loan is issued, the lender will forgive that portion of the debt. The borrower must prove that the money was spent in one of the ways listed. Also, the forgiven debt will not count as taxable income.

Be aware that forgiveness for amounts paid to individuals for payroll or contractor expenses in excess of $100,000 will be prorated.

Also, an employer must maintain the same average number of employees as they did in the period of February 15, 2019 to June 30, 2019 or January 1, 2020 to February 15, 2020. If they don’t, or if the wages they’re currently paying are reduced from that period, the amount forgiven will also be reduced. The good news: employers have until June 30 to re-hire those employees and restore their wages.

More incredibly, there is no personal guarantee or collateral needed, borrowers are eligible even if they have other sources of credit, and there is no fee.

These loans are available via lenders authorized as “SBA 7(a)” lenders, and a list of those lenders can be found here. Although these loans are not available as of this moment, because there are no fees and no obligation to take the loan, we strongly suggest that anyone eligible for this funding apply as soon as possible.


The other notable section of this acts provides up to $10Billion in the form of grants to be given as loans by the Small Business Administration (SBA) directly to qualifying businesses. Small businesses with less than 500 employees, sole proprietorships, and independent contractors are eligible for a loan of up to $2,000,000 at 3.75% (2.75% for non-profits) if their current business was in operation on January 31, 2020. Also:

  • There is no personal guarantee needed for loans less than $200,000
  • Approval is based solely upon the applicant’s credit score
  • Prior bankruptcy does not disqualify an applicant
  • Payment is not due on these loans for one year

This money must be used for:

  • Sick leave due to COVID-19
  • Maintaining payroll and retaining employees
  • Increased supply chain costs
  • Rent and mortgage payments
  • Repaying debts

Although this funding may take time to obtain, emergency funding of up to $10,000 is available as a cash advance to cover immediate expenses within three days, even if the applicant does not qualify for the loan.

These loans are available NOW at this link and our advice is to apply right now!