Tips For Small Business Relief During The COVID-19 Crisis
April 17, 2020
It is no surprise that COVID-19, and government responses attempting to slow the pandemic, have had a devastating impact on the global economy. The unemployment rate in the U.S. is at an unprecedented high, with approximately 6.6 million Americans filing for unemployment in the first week of April alone. Shelter in place orders across the country have forced non-essential businesses to close their doors, prompting layoffs and payroll freezes for millions of people. While larger corporations may have the ability to allow employees to work from home, or continue to pay their employees during the quarantines, most small business owners (including sole proprietors and freelance workers) have limited ability to continue paying employees or meeting their overhead expenses. In response, the federal government passed a $2 trillion economic relief plan, including small business protections. This article compares the types of relief available to small businesses and tips on applying.
Types Of Relief Available
Payroll Protection
● | Relief Available: Up to $10 million for payroll and benefits at 1% interest rate on non-forgiven funds |
● | Collateral or Other Requirements: Varies by financial institution |
● | Forgiveness: Full forgiveness if the business maintains headcount for 8 weeks after disbursement/Partial forgiveness if businesses reduce their workforce by 25% or more |
● | Distribution Timing: Varies by financial institution |
SBA Economic Injury Relief Loans | ||||||||
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SBA Express Bridge Loans | ||||||||
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Tips For Applying | ||||||||||
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Things To Keep In Mind
Financial institutions are already reporting a higher than expected number of applications, prompting them to limit applications, add restrictions, or pause applications altogether. The federal government has indicated it will attempt to approve more funds for the economic relief package, however, when and if those funds will become available is uncertain. The SBA also announced on April 6, 2020, that Economic Injury Disaster Relief loans will be limited to $1,000 per employee. New restrictions and limitations are a direct result of the ongoing uncertainty of how long the shelter in place orders stay in effect. With rules changing every day, along with funds running low, the best thing you can do for your small business is to apply now. For more information on how and where to apply, business owners can find more information at sba.gov.