COVID-19 Small Business Relief Programs
The coronavirus pandemic is affecting the finances of thousands of people across the country. Consumer habits have been changing in unpredictable ways. Many businesses have been forced to close due to preventive quarantines. Many business owners are suffering the consequences of COVID-19.
If you have a business, most likely, this crisis translates into a negative cash flow and a lowering in income.
The Government’s Response to Coronavirus
The U.S. government, to help all its citizens, and to support the economy and the healthcare system in light of the health crisis, has created a stimulus called: Coronavirus Aid Relief & Economic Security (or CARES) Act.
There are specific provisions within the CARES Act focused on extending capital to small businesses to ensure their survival. This is called the Keeping American Workers Paid And Employed Act.
In an effort to keep jobs and ensure their survival of small businesses during the coronavirus pandemic, the U.S. Congress passed a $377 billion stimulus package.
| UPDATE: To further help small business owners and offer them debt relief, the SBA is making some changes. They will pay the on outstanding 7(a), 504s, and microloans over six months for the following:
For new 7(a), 504s, and microloans issued before September 27, 2020, they will pay:
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Small Business Relief Programs
This funds will be broken out into the following programs:
| Funding Program | Brief Description | $ in CARES Act |
|---|---|---|
| Paycheck Protection Program (PPP) | Expansion of existing SBA 7(a) loan program primarily dispersed via banks, credit unions, and other SBA certified lenders | $349BN |
| Entrepreneurial Assistance | SBA resources to train and build capacity for entrepreneurs and business owners | $275 million |
| Economic Injury Disaster Loans (EIDL) | Emergency disaster loan program with funds deployed directly by the SBA via its website | $10BN |
| Small Business Debt Relief | SBA to pay all principal, interest, and fees on all existing SBA loan products for six months to provide relief to small businesses negatively affected by COVID-19 | $17BN |
The basic eligibility for the CARES Act programs is as follows:
- That you are a small business (have less than 500 employees or be a “small business” under the applicable NAICS code employee size standard, including employee count of Affiliates)
- Small Businesses, including sole proprietorships, with or without employees
- Independent contractors
- Cooperatives and employee-owned businesses
- Private non-profits
- Tribal small businesses
Make sure you review the specific eligibility terms for each program.
If you want to learn more about the PPP program, click here.
If you want to learn more about the EIDL program, click here.
FAQs
Below are additional and clarifying FAQs:
When should I apply for a loan?
You can apply TODAY for the EIDL program.
For the PPP 7(a) Loan:
- Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
- Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
- Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.
That said, it’s always helpful to get conversations started with your bank sooner rather than later.
Who is eligible?
- Businesses and entities must have been in operation on February 15, 2020
- Less than 500 employees
- Eligible Parties
- Small Businesses, including sole proprietorships, with or without employees
- Independent contractors
- Cooperatives and employee owned businesses
- Private non-profits
- Tribal small businesses
- For PPP, banks, credit unions, and SBA lenders are applying additional restrictions. Most banks are limiting PPP eligibility to their existing clients.
Can I apply with an ITIN?
It’s unclear whether ITIN only business owners can qualify for either program. Join the webinar on Tuesday to receive more guidance.
Can I apply for both programs?
- Yes. However, you cannot use the funds of the loans for the same purpose.
- If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan.
- If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.
References and Useful Resources
Loan Program Documents:
- PPP Application Form
- Small Business Payback Protection Program Overview
- PPP Information Sheet for Borrowers
Legislation Documents & Summaries:
- CARES Act, full document
- The Small Business Owner’s Guide to the CARES Act by the Small Business House Committee
- Keeping American Workers Paid and Employed Act
Read more articles and find some more helpful resources to help you during this crisis: