Small businesses are some of the hardest hit by the COVID-19 pandemic. In complying with the guidance issued by government and health authorities, many of our beloved businesses on Main Street have been forced to rethink their daily operations or close their doors completely. This is a devastating blow for both small business owners and their hardworking, loyal staff. During this unprecedented crisis, there are a variety of options available to help keep small businesses afloat and sustain their workforces.
For more details, visit the Small Business Administration’s website here.
Paycheck Protection Program
To help small businesses keep their workforce paid, the U.S. Treasury and Small Business Administration (SBA) have begun implementation of the Paycheck Protection Program. Established by the Coronavirus Aid, Relief and Economic Security (CARES) Act, the program provides cash-flow assistance through forgivable SBA loans to employers who maintain their payroll during the COVID-19 pandemic.
Who qualifies for the program?
Small businesses and other eligible entities (including churches and religious organizations) can apply if they were harmed by COVID-19 between February 15 and June 30, 2020. In order to help bring back workers who may have already been laid off, the program is retroactive to February 15, 2020.
How do these loans work?
While PPP loans are backed by the SBA, loan approval relies solely on the lending bank or financial institution – not on the SBA. This works similarly to Federal Housing Administration (FHA) home loans, in which the government agency (Federal Housing Administration) backs a home loan that is applied for through and approved by the outside lender (bank or financial institution).
If PPP loan applicants are denied, they should work with the lending officer to learn how to become better positioned for approval of the loan.
Are there loans available directly through the SBA?
Yes. Unlike the Paycheck Protection Program, there are funding programs available directly through the SBA, including the Economic Injury Disaster Loan (EIDL), which provides up to $10,000 in economic relief to businesses that are temporarily struggling due to COVID-19.
For more information, click here.
How do eligible businesses and entities apply for the PPP?
- Effective April 3, small businesses and sole proprietorships can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating.
- On April 10, applications open also for independent contractors and self-employed individuals.
- While loans are potentially available through June 30, 2020, the U.S. Treasury advises interested businesses, entities and individuals to apply as quickly as possible since there is a funding cap.
Small Business Debt Relief Program
The Small Business Debt Relief Program provides immediate relief to small businesses with non-disaster SBA loans – specifically 7(a), 504 and microloans. Under this program, SBA will cover all loan payments on these SBA loans, including principal, interest and fees, for six months.
This relief will also be available to new borrowers who take out loans within six months of the president signing the CARES Act into law.
For more information, click here.
Economic Injury Disaster Loans and Loan Advances
To help cover operating costs during this crisis, small businesses may qualify for SBA’s Economic Injury Disaster Loans and Loan Advances. Moreover, the CARES Act provides for the SBA to cover six months of payment for small businesses with existing loans.
- These grants provide an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL).
- To access the advance, you first apply for an EIDL and then request the advance. The advance does not need to be repaid under any circumstance, and may be used to:
- Keep employees on payroll
- Pay for sick leave
- Meet increased production costs due to supply chain disruptions
- Pay business obligations, including debts, rent and mortgage payments.
How to Apply
Application form and more information on the process is available here.
Express Bridge Loan Pilot Program
The Express Bridge Loan Pilot Program provides small businesses that currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork.
How to Apply
Find an Express Bridge Loan Lender by connecting with your local SBA District Office:
SBA Oklahoma District Office
301 NW 6th St
Oklahoma City, OK 73102
Customer Service Center: 1-800-659-2955
The CARES Act also provides for tax provisions to help small businesses through this crisis.
- This tax credit provides a refundable payroll tax credit for 50 percent of wages paid by eligible employers to certain employees during the COVID-19 crisis.
- The credit is available to employers, including non-profits, whose operations have been fully or partially suspended as a result of a government order limiting commerce, travel or group meetings.
- The credit is also provided to employers who have experienced a greater than 50 percent reduction in quarterly receipts, measured on a year-over-year basis.
- The credit is not available to employers receiving assistance through the Paycheck Protection Program. The credit is provided through December 31, 2020.
Employer Payroll Taxes
The CARES Act also provides for delay in payment of Employer Payroll Taxes.
- This provision would allow taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020, with all 2020 deferred amounts due in two equal installments, one at the end of 2021, the other at the end of 2022.
- Payroll taxes that can be deferred include the employer portion of FICA taxes, the employer and employee representative portion of Railroad Retirement taxes (that are attributable to the employer FICA rate) and half of SECA tax liability.
- Deferral is not provided to employers receiving assistance through the Paycheck Protection Program.
Small Business Counseling
In navigating this uncertain time, small business owners are encouraged to seek business counseling available through a local Small Business Development Center, Women’s Business Center, Veteran’s Business Outreach Center or SCORE mentorships.
To find a business counselor, click here.