The Coronavirus Aid, Relief, and Economic Security Act, known commonly as CARES, was signed into law on March 27th in the United States. It’s designed to help American businesses that are struggling financially due to the coronavirus outbreak.
Among reasons coronavirus has impacted businesses are government-mandated business closures, social distancing protocols, and employees being asked to stay at home. The shipping industry is experiencing distinct challenges, including fewer products being ordered by businesses as non-essential businesses are ordered to shut down, and fewer warehouse and shipyard workers available to move products, resulting in an increase of blank ship sailings and cancelled flights.
The CARES Act provides benefits across all industries to help the economy continue in the wake of COVID-19. Here are some of the ways CARES impacts the shipping industry:
● Paycheck Protection Program reserves $349 billion in forgivable loans for businesses with fewer than 500 people. These loans are designed to help employers retain employees during a time when the shipping business is waning due to crisis. If the loans are used for things like rent and payroll, and employees are retained, the loans are forgiven. Although this program ran out of money within the first couple weeks of its offering, Congress is currently working to add funds to the Paycheck Protection Act, enabling small businesses to access much-needed funds.
● Emergency EIDL Grants from the Small Business Association (or SBA) offer special loans for small businesses, agricultural organizations, and non-profits during times of economic injury. The maximum loan amount is $2 million. Small businesses receive up to a 30-year loan with a 3.75% interest rate, where non-profits receive a 2.75% interest rate on the same loan term.
● Coronavirus Economic Stabilization Act of 2020 provides loans, loan guarantees and investment options to businesses that don’t qualify for relief. This fund includes $500 billion for economic stabilization.
These programs help shipping-related businesses to stay open and keep freight moving during such difficult times.