Updated Monday, April 27, 2020.
Many businesses throughout the world have been negatively impacted by the COVID-19 outbreak and the resulting rules and restrictions around social distancing. Regardless of the size of your business, it can be difficult to weather an unexpected and unprecedented storm such as this one. Fortunately, there are several government-sponsored programs in place now to help small business owners get through these trying times.
It can be challenging to sift through the media to figure out which program might work for you. Here’s a quick run-down of the new temporary relief programs offered by the Small Business Administration. These programs are designed to help small businesses retain workers, keep bills paid, and keep the business running during this time of closed doors and plunging revenues.
Small Business Administration Assistance
The SBA has several traditional funding programs available to encourage small business start-ups and to assist small business owners in the growth and development of their businesses. But with the establishment of the CARES Act, several new temporary programs have been established to help companies survive in the wake of COVID-19. These temporary programs include the following:
Paycheck Protection Program
This loan program helps business owners keep their workforce employed during the COVID-19 crisis. Under this program, a business may apply for a loan through an existing SBA 7(a) lender. The SBA will forgive the loan if all employees stay on the payroll for eight weeks, and the loan money is used for payroll, rent, mortgage interest, or utilities.
As of Monday, April 27, 2020, the SBA is accepting new applications for this program again.
Economic Injury Disaster Loans
The SBA’s EIDL program offers up to $2M in low-interest-rate loans to businesses suffering catastrophic losses due to COVID-19. This program is administered on a state-by-state basis and is available in all states. However, new applications are not being accepted at this time due to funding appropriation limitations.
Economic Injury Disaster Loan Emergency Advance
This EIDL advance program provides up to $10,000 of financial relief to businesses that are currently experiencing revenue challenges due to the COVID-19 situation. This loan does not have to be repaid. However, at the time of this writing, the SBA is not accepting new applications for this program based on funding limitations. Those who have already submitted an application for this program will continue to be processed on a first-come, first-served basis.
SBA Express Bridge Loans
This loan allows small businesses that already have a relationship with an SBA Express Lender to access up to $25,000 in assistance quickly. This assistance can be used to help keep the business running in the face of revenue losses; it can also be used to bridge the gap when applying for an EIDL advance. This loan will be repaid in full or in part by the proceeds from the EIDL advance.
Additional SBA Debt Relief
The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for six months. In addition, it will automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued before September 27, 2020. Also, current SBA-serviced Disaster (Home and Business) Loan holders will benefit from deferred payments through December 31, 2020, as long as their disaster loan was in regular servicing as of March 1, 2020.
Talk to Your Accountant Before Applying for Relief
This information will be updated as more information becomes available. In the meantime, before applying for any relief program, talk with a certified accountant for help in figuring out which program is the most beneficial for your business.
Adams Accounting Solutions can help guide you through the maze of SBA programs currently available and answer questions about the tax implications of these programs or other COVID-19-related issues. Give us a call at 913-888-9100.
