Understanding the Covid-19 Small Business Relief Programs
The Coronavirus has caused havoc around the world, shuttering businesses and creating huge spikes in unemployment, particularly for small businesses. Fortunately, a strong safety net of federal and state programs is now in place to start to mitigate the viral damage. Here is an overview of the many options available, with an emphasis on those for small businesses.
- The Paycheck Protection Program (PPP) is specifically designed to help small businesses keep their workers on the payroll. It provides small business loans to cover eight weeks of payroll and certain overheads to keep workers employed. It is also be available to employers who rehire their laid-off or furloughed employees. It is available to small businesses, certain individual contractors, non-profits and faith-based organizations. The program is open to all small businesses that were in business on or prior to February 15, 2020.
PPP loans are a 2 year term loan at 1%, with no payments due for 6 months. The key component to this program is that if the funds are used within the guidelines of the program, the loan can be forgiven and the small business would not have to repay any of it.
Applications are being handled by local lenders, so contact your bank for more information or refer to this SBA list of participating lenders: https://www.sba.gov/sites/default/files/resource_files/Rhode_Island_Participating_Lenders_3.pdf. For more information, visit the Small Business Administration (SBA) at https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.
- Economic Injury Disaster Loans (EIDL) – This SBA program provides small businesses with working capital loans of up to $2 million to help overcome the temporary loss of revenue caused by the virus and the economic downturn. It is available to small businesses, certain individuals, non-profits and faith-based organizations. Businesses may apply for both the PPP and EIDL programs.
When applying for the EIDL loan, applicants may also request an immediate advance on that loan of up to $10,000. This advance will not have to be repaid. Applications for this loan go through the SBA at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance
- State Unemployment Benefits Expansion - The federal government has directed that state unemployment (UI) benefits programs be expanded to include individuals with limited work history, self-employed individuals, gig workers, independent contractors, and part-time workers. State UI benefits and Federal PPP benefits are mutually exclusive.
Benefits payment amounts will be increased by $600 per week for 4 months and eligibility for benefits will be extended an additional 13 weeks, up to 39 weeks. The program is retroactive to benefits starting January 27, 2020. These UI programs are managed by state unemployment offices, so check the web site for your state:
- Rhode Island - http://www.dlt.ri.gov/ui/
- Massachusetts - https://www.mass.gov/topics/unemployment-information-for-workers
- SBA Express Bridge Loans and Debt Relief – This program enables small businesses that have an existing relationship with an SBA 7(a) Express Lender to access up to $25,000 in Express Bridge Loans and/or to obtain temporary reprieve from current loan repayments. The SBA Debt Relief is for small businesses that have an existing 7(a), 504, or SBA microloan. Any small business with one of these loans should contact their lender to see what assistance is available to them. Visit the SBA site for more information at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-debt-relief
- Families First Coronavirus Response Act (FFCRA) - This US Department of Labor act requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA. These provisions apply from April 2 through December 31, 2020. For complete details see https://www.dol.gov/agencies/whd/pandemic/ffcra-employer-paid-leave
There are many more relief programs, both public and privately funded, addressing a wide range of needs. So investigate and consider the alternatives and if you would like help, SCORE volunteers are available to assist. Feel free to reach out to your local SCORE chapter at www.score.org or call 401-226-0077. In addition, SCORE offers webinars, workshops, articles and other blogs addressing the many issues small businesses are facing as a result of the pandemic: https://www.score.org/coronavirus?_ga=2.226042650.1883333104.1586366006-830467633.1458070837
Here are some additional resources:
- Rhode Island Commerce: https://commerceri.com/covid-19/, and https://commerceri.com/financing/
- Rhode Island Department of Health: https://health.ri.gov/covid/
- State of Massachusetts: https://www.mass.gov/resource/information-on-the-outbreak-of-coronavirus-disease-2019-covid-19
For more than 50 years, SCORE has helped more than 11 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in more than 300 chapters serve their communities.
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