American Dream Project
Small Business Assistance During COVID-19: Part I
Updated: Apr 22, 2020
Learn about federal assistance that may be available for your small business and how America is protecting this important part of our economy during the pandemic.
Did you know that 99.9% of United States Businesses are in fact small businesses? According to the 2018 Small Business Profile from the U.S. Small Business Administration, there are over 30.2 million small businesses in America employing approximately 58.9 million Americans. That’s 47.5% of our workforce! So, how is America going to protect one of the most important parts of our economy during the COVID-19 Pandemic?
On Friday, March 27, 2020 President Trump signed into law the CARES Act containing $376 billion in relief for American workers and small businesses as well as new temporary programs to address the effects of COVID-19. Here’s an overview of how these federal programs can assist your business.
The SBA implemented four new programs as a part of the CARES Act: The Paycheck Protection Program, EIDL Loan Advance, SBA Express Bridge Loans, and the SBA Debt Relief. The purpose of this post is to provide an overview of relief options. For specific details we encourage everyone to research their options and visit the SBA website (sba.org).
The Paycheck Protection Program is a loan that provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program. Its main purpose is to provide an incentive for small businesses to keep their employees on payroll. As long as employees remain on payroll for eight weeks and the loan money is used for payroll, rent, mortgage interest, or utilities, the SBA will forgive loans. To apply, the SBA recommends you consult with your local lender to find out if they are participating in the program.
EIDL (Economic Injury Disaster Loan) Emergency Advance will provide up to $10,000 of economic relief to businesses that are currently experiencing COVID-19 outbreak-related financial difficulties. A huge perk to this loan is that it will not have to be repaid. If your small business has less than 500 employees and is facing a temporary loss of revenue due to social distancing or local restrictions, we encourage you to review the requirements for eligibility and apply.
SBA Express Bridge Loans will enable small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000. This program will provide a prompt loan that will help bridge the gap between now and the time you receive the EIDL advance. It is important to note, this loan will need to be repaid but you can do so using the EIDL loan. If your small business needs a fast turnaround of cash, this may be a good option to review in greater detail.
The SBA Debt Relief is set up to provide a financial reprieve to small businesses. Its main objective is to pay the principal, interest, and fees for certain loans. This program also offers automatic deferments through December 31, 2020 for SBA Serviced Disaster (Home and Business) Loans. If this pertains to your business, you can review information and guidelines on the SBA website.
Closing your storefront to come together as a community and country to fight this pandemic is a difficult hardship for any business to endure. This is an especially trying time for brick-and-mortar that thrives on customer interaction and experiences. Understanding the financial assistance and resources available can help you advocate for your business. In addition to federal support, there is also assistance available at the local level. We’ll dive into that in Part II of this blog series!