Photo Credit: Pixabay, Mohamed Hassan
Senator Van Hollen’s staff – Karolina Arias and Harry Stein – joined the Recast City open zoom call on 3/30 to share information about the new emergency funding mechanisms for small businesses in the federal bill signed on 3/27/20.
Here is a summary of what we covered, links to good sources of additional information, and other resources shared by people on the call:*
NOTE: PPP guidance is live - links below!
Emergency Injury Disaster Loans (EIDL)
This program is run out of the Small Business Administration and you apply here: https://covid19relief.sba.gov/#/
This program allows small businesses (under 500 employees) and non-profits to apply for a disaster loan. This includes self-employed and sole proprietorships.
Payment of the loan is deferred for at least 6 months. Loan rates are 3.75% for small businesses and 2.75% for private non-profit organizations with a term of up to 30 years.
This loan can be used to pay for standing debt, payroll, and any other bills that can’t be paid because of the crisis.
Applicants can receive a $10,000 grant as a first step in the loan. SBA will award this grant within 3 days of an application submitted to help provide a bridge of funding to the business or non-profit while applications are reviewed.
Paycheck Protection Program (updated 4/3/20 - per Treasury guidance release 4/2/20)
This program will be run out of SBA lenders in your community. For a list of existing SBA lenders go here: https://www.sba.gov/local-assistance/find/. SBA may quickly add additional lenders to help support this distribution of funds.
SBA released guidance on this program on March 31, 2020. Here are the details and here is the application form to use with your local SBA bank.
This program allows small business (under 500 employees), non-profits, self-employed and sole proprietors to apply for a forgivable loan to cover two and a half months of salaries and benefits for employees.
Costs that can be covered under this program include: salary (up to $100,000 of a salary if it’s higher), all benefits including health care, and state and local taxes for employees. This program funding can also be used to cover mortgage and rent payments and utilities. 75% of the funds must be used for salaries.
The loan has a rate 0f 1.0% and a term of 2 years.
The maximum loan amount will be 2.5 times the entity’s average monthly costs for total salaries and benefits.
The loan can be forgiven – either partially or in its entirety – if the entity shows that it retained or rehired its employees within 8 weeks of receiving the funding (or by June 30th – there is still a bit on confusion on this part). If all employees are retained or rehired – the loan is 100% forgiven. If 50% of the employees are rehired, then 50% of the loan is forgiven. You get the idea. Guidance will come out on this soon.
No collateral or guarantee required
Documentation to the local lender can be payroll processor records, payroll tax filings, or Form 1099, or income and expenses from a sole proprietorship, or bank records
You need SBA Form 2483 (Paycheck Protection Program Application Form) and payroll documentation to apply
A few overarching notes on all of this from our discussion on Monday:
You can accept both EIDL and PPP funding, but you have to apply them to different needs. For instance, you can use one to pay for March salaries and the other one to pay for April and May salaries. (updated as of 4/1/20 - 11:30am per new info from Van Hollen staff)
If you take the EIDL $10,000 grant, and then get a PPP, that $10,000 grant will be folded into your PPP allocation.
If you have an existing SBA loan, you can get it deferred for 6-12 months. Make sure to check with your lender because it may not happen automatically.
If you are not sure that you can rehire or retain your employees for the 8 weeks after receiving PPP funds, remember that you will need to pay it back. It is ONLY forgivable if you can show employee retention/rehires. But it is a lower loan rate, so might be worth it either way as compared to the EIDL.
These programs will be first-come, first serve. This means that if you are interested in them, help your small businesses and non-profits organize their papers ASAP.
What else do we need to do?
Organizations nationwide need to help our small business owners get through this process. We need to reach out to all of the connectors in our communities to help find small business owners who are not well connected to existing local small business programs. Each community can:
Offer trainings in multiple languages,
Ask faith organizations, neighborhood leaders, and cultural groups to share information about the small business programs and reach into each of their networks with the information,
Provide grants to existing small business service providers – especially those focused on support for business owners of color, women, and immigrants – to conduct outreach to these populations.
We all have the responsibility to promote these programs broadly and purposefully to create inclusive access to these sources of federal assistance.
The next question is – how do we support the businesses that are not being served by these programs?
If a business can’t be assured that it will be ready to rehire by the end of June, and the owner is wary about taking out more debt for their business, these programs will not help.
That leaves a lot of businesses out of these federal solutions.
Some state and local emergency funding programs are getting launched to provide grants from $10,000 to $75,000 per business. Will these be enough of a bridge to help businesses survive?
What else can we do?
We have a responsibility to create and distribute support to inclusively support all of our struggling business owners.
Without it, we will struggle to rebuild our paused economy like never before – with an even more extreme world of income inequality (it was bad enough before), more division between businesses that received support and those that didn’t (especially ones owned by women and people of color), and even more people and places left behind.
Instead, let’s work together to fill these gaps and make sure that we reach all of our businesses with the kinds of support they need to help our small businesses survive and then thrive.
Are you with me?!
Recast City is here to help you fill these gaps and reach all of our small businesses in need. Check out the details here.
Additional resources/models shared by participants on the call:
Grants for small businesses in Fuquay from an Angel Fund: https://www.facebook.com/Fuquay-Varina-Angel-Fund-104275101218301/
Michigan small businesses relief programs: https://www.michiganbusiness.org/about-medc/covid19/small-business-relief-program/
North Carolina resources: https://ncrapidrecovery.org/
Worker Relief Funds by State: https://goodjobsinstitute.org/wp-content/uploads/2020/03/Good-Jobs-Lens-on-COVID-19-Responses-3.17.2020.pdf
Forbes list of State/Local/Federal resources regularly updated: https://www.forbes.com/sites/advisor/2020/03/20/list-of-coronavirus-covid-19-small-business-relief-programs/#5539d9ebe89d
ICIC’s website with lots of different kinds of resources: www.icic.org
* Due to my technical errors, I cannot share a recording of the session – so sorry folks!