Small Business Administration and Coronavirus Assistance

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With the COVID-19 outbreak sweeping the country, and over 75% of Americans currently under shelter-in place orders, small businesses face a prolonged period of economic uncertainty. To help these businesses survive the coming months, Congress included several relief measures in the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, passed on March 27. The CARES Act provides wide-ranging relief for small businesses affected by the crisis, including hundreds of billions of dollars of loans and grants designed to ensure businesses keep employees on their payrolls and have the necessary cash to weather the crisis. Below, we highlight these resources and which businesses stand to benefit:

Paycheck Protection Program
Most businesses with 500 or fewer employees can apply to receive loans from the Paycheck Protection Program, which is designed to prevent widespread layoffs by small businesses. Businesses receiving this assistance can receive up to $10 million loans from banks and lenders backed by the federal government. If all employees are kept on the payroll for the next eight weeks, the principle on the loans will be forgiven and businesses will only be on the hook for interest. One caveat is that small businesses where venture capital firms have more than 50% equity are disqualified from participation. Many startups could be left out of the program under these rules.

Economic Injury Disaster Loans and Loan Advance
For small businesses who need additional assistance staying afloat, Economic Injury Disaster Loans and Loan Advances are available. Businesses can receive loans up to $2 million and $100,000 in loan advances. The advance does not have to be repaid and can serve as a lifeline for businesses currently experiencing a loss of revenue. Generally, businesses must be smaller than 500 employees to qualify. Additional requirements and the application page can be found here.

SBA Debt Relief
The SBA’s Debt Relief program can provide relief for businesses with existing loans or seeking to take out new loans. Under the new Debt Relief program, the SBA will pay the interest and principle of current 7(a) loans for a period of six months and new 7(a) loans issued until September 27, 2020.  7(a) loans are the SBA’s primary existing lending program for small business and can be issued in amounts of up to $10 million.

SBA Express Bridge Loans
Lenders already receiving loans from the Express Bridge Pilot program can now receive up to $25,000 in additional loans with additional paperwork. These funds can be accessed with fast turnaround and used while businesses apply for additional relief.

More information can be found at: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources