Several federal, state, local and private organizations have implemented programs to support businesses that are struggling because of the coronavirus and the related economic downturn. As of April 21st, here is a list of loans, benefits, and programs:
The federal government has issued three major pieces of legislation to address the needs of the country during the pandemic. The main piece of legislation directed toward small businesses is the CARES Act.
According to the SBA, since its inception, 14 million businesses have already applied for the programs included in the CARES Act. Currently Congress is voting on a fourth stimulus bill to extend the funding to help even more businesses.
SBA – Small Business Association
The SBA operates four different programs that make up the CARES Act:
The federal government created this program to help employers maintain and pay their employees. It includes a forgivable loan that matures after 2yrs at an interest rate of 1%. Currently the SBA is not taking new applications for this program due to funding restraints.
This is an advance of up to $10,000 in economic relief that will not have to be repaid. The SBA has also put this program on hold until Congress votes in more funds.
Small businesses that currently have a business relationship with SBA qualify for this loan of up to $25,000. One benefit of this loan is it is a faster qualification process than other loans and can serve as a bridge while applying for loans like the EIDL.
For six months, the SBA will provide debt relief by paying principal, interest, and fees for certain new and existing microloans through this program.
- This legislation requires businesses with fewer than 500 employees to provide paid sick leave and planned family leave for employees affected by the pandemic.
- It also institutes a 100% tax credit for these businesses up to the capped amount of benefits that they must pay.
- This was the original legislation that provided the funding for the EIDL, which was later given additional funding through the CARES Act. As mentioned above, legislation is pending to re-fund this program, but currently the SBA is not taking any new applications.
IRS—Internal Revenue Service
- The IRS has extended federal tax filing dates for businesses from April 15, 2020 to July 15, 2020. Penalties and Interest will accrue after that date. This extension does not apply to filing of state taxes.
The CARES Act also makes the following changes to tax policy:
- It qualifies certain businesses for a tax credit for retaining their employees.
- It allows certain businesses and self-employed workers to delay their payroll tax payments.
- It permits the relaxing of limitations on businesses that have had a net operating loss (NOL).
USDA—US Department of Agriculture
- This program allows lenders to offer 180-day loan payment deferrals for borrowers without prior approval by the agency.
The Federal Reserve
This program is made up of two loans. Businesses can apply for both the SBA loans and these loans simultaneously. Both loans in the Mainstreet Lending Program require a minimum borrow of $1 million dollars and have a term of four years.
- The Mainstreet New Loan is an unsecured loan that requires no collateral. The maximum loan size is $25 million or an amount that does not exceed the borrower’s existing debt plus four times the eligible borrower’s income for 2019.
- The Mainstreet Expanded Loan might need collateral, depending on loan requirements. The maximum loan size is $150 million, 30% of the borrowers existing debt, or an amount when added to the borrower’s current debt, doesn’t exceed six times the borrower’s income for 2019.