The entire Child Care Success Company has been working tirelessly to stay on top of how the Coronavirus is effecting daily operations for child care businesses so we can provide our Academy members with the most up-to-date resources and information during our weekly Academy Q & A calls. This past week, struggling small business owners across in the United States were finally provided much needed federal assistance when Congress passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act.
With this being a huge win for child care owners across the country, Coach Brian Duprey recorded a video for our Academy members to help walk them through in’s and out’s of what the CARES Act means for them. Because we know that not only are our Academy members looking for guidance on this topic, but all ECE business owners in the United States are, we decided to share that resource with you all this week on our blog. #WeAreInThisTogether
Here Are the Key Takeaways From This Video:
- Regardless of where the day-to-day operations of your child care business stand right now, if you are located within the United States then your business has been thrown a lifeline when Congress passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act for small businesses.
- Businesses that have under 500 employees, providing that they were already in business as of February 15, 2020, will qualify if they have been affected in any of the following ways due to Coronaviris –
- You have had a loss in customers or a reduction of income.
- You’ve had staffing challenges (for reasons such as employees being exposed and having to self-quarantine, being infected, or having to care for their children or family members that have fallen ill during this time).
- You’ve had to close your doors. The maximum amount of money that you can borrow is 2.5 times your average monthly payroll expense. This number is computed by taking the average of your monthly payroll in the preceding 12 months prior to getting the loan. If you are a newer business, then use your average monthly payments from January 1, 2020 to February 29, 2020. Example: If your average monthly payroll is $50,000, then your maximum loan amount would be $50,000 x 2.5 or $125,000.
- You can spend the money you receive from the CARES Act on –
- Payroll costs
- Continuation of group health care benefits during a period of paid sick leave
- Employee salaries and commissions
- Interest on mortgage obligations (no principal)
- Rent (lease agreement)
- Interest on debt obligations incurred prior to getting the loan (i.e. school bus payment interest)
- Upon loan approval, you must certify to the government that you are using the funds provided to you to retain workers and maintain payroll or may mortgage payments, lease payments, and utility payments.
- No collateral is required for this loan. You are guaranteed acceptance if you qualify and will be funded very quickly (within a few business days).
- The interest rate on the loan will be no more than 4% and term up to 10 years.
- If you find yourself needing further financial assistance than what the CARES Act provides you with, there is nothing that prohibits you from additionally applying and receiving an economic injury disaster relief loan from the SBA.
For the immediate 8 week period following the loan, you are able to seek loan forgiveness for if you have documentation for the following
- Payroll costs
- Interest on covered mortgage
- Rent payments
- Utility payments
- To obtain the maximum amount of loan forgiveness that you qualify for, you must hire all of your employees back after your business returns to normal operations. The loan forgiveness will be reduced by multiplying the quotient obtained by dividing (whichever is better for you).
- The average number of FTE employees per month from February 15, 2019 to June 20, 2019
- The average number of FTE employees per month from January 1, 2020 to February 29, 2020
- You can read the full CARES Act on NPR’s website here.
A note from Brian Duprey – “The information presented here was compiled from public documents and news reports, and are factual to the best of my ability. All information presented is general in nature and may or may not be applicable to all child care businesses. As always, please consult your CPA or Attorney to get the best advice on how to apply the CARES Act to your particular business.”
Brian Duprey is a Child Care Business Coach at the Child Care Success Company. He is also the author of the of Child Care Millionaire and co-author of the #1 Amazon New Release Best Seller The Happiness Guide for Early Educators.