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How Small Businesses Can Get Help During the Coronavirus Outbreak

The coronavirus outbreak has turned everyday life on its head. People are staying indoors and practicing social distancing, aiming to reduce the spread of the disease. While these essential measures have helped keep people healthy and have saved lives, many businesses are facing the impact of enforced closures and reduced foot traffic.

More than half of Americans are worried about the economy and their individual retirement savings, and business owners are no different. Small businesses often have just a few weeks’ worth of operating costs saved, meaning even a short closure can doom a business.

The government and many lenders have offered assistance and other forms of relief to businesses. If you own a small business, there are options available to you to help keep the lights on and your business running.

In this guide:

How to get a Coronavirus Emergency Paycheck Protection Loan

One of the government’s programs for helping small businesses impacted by the coronavirus is the Coronavirus Emergency Paycheck Protection Loan Program. The goal of this assistance is to help small businesses keep their workers in their jobs and earning incomes.

What is an Emergency Paycheck Protection Loan?

Emergency Paycheck Protection Loans are loans offered by the Small Business Administration to businesses affected by the coronavirus outbreak. The loans are meant to help business owners keep their employees on the payroll and pay their essential bills, like rent.

The loans come with a two-year term and an interest rate of 1%, making them incredibly inexpensive compared to most other types of loans. There is also the possibility of the SBA forgiving the balance of the loan, turning it into a grant for eligible businesses.

What are the eligibility requirements?

To apply for an Emergency Paycheck Protection Loan, your business must meet the following requirements:

  • Your business must have fewer than 500 employees. Exceptions for larger businesses in specific industries are available—for instance, businesses in foodservice and hospitality may be eligible if they have multiple locations, each with fewer than 500 employees.
  • Your business must have been impacted by the outbreak of the coronavirus.

Those are the only two requirements. Everything from a sole proprietorship to a medium-sized non-profit organization can apply for and receive a loan.

What are the requirements for the government to forgive the loan?

If you apply for and receive a loan, you won’t receive your first bill until six months from the date you receive the money. Again, the loans come with a two-year term and a 1% interest rate.

The Small Business Administration also offers the opportunity to have the loan forgiven. If this happens, you will not have to repay the loan at all. Instead, it becomes a grant provided by the SBA.

To qualify for loan forgiveness, your business must:

  • Use the funds only for payroll expenses, rent, utilities, and mortgage interest, with at least 75% of the funds going toward payroll expenses
  • Keep all employees on the business’s payroll for eight weeks after receiving the loan
  • Maintain wages similar to those comprising your business’s current payroll

A look at the Federal Small Business Stimulus Aid Programs for the Coronavirus

The Paycheck Protection Program isn’t the only government effort to help small businesses. The Coronavirus Preparedness and Response Supplemental Appropriations Act includes many other opportunities for businesses and individuals affected by the coronavirus.

In addition to providing the small business benefits described earlier, the act also includes:

  • Funding for the Center for Disease Control, Food and Drug Administration, and other health-related organizations
  • The expansion of telehealth service options for those on Medicare
  • Funding for international efforts to combat the coronavirus

Other programs that can help

Small business owners can take advantage of other assistance programs that can keep their businesses going through the crisis.

Economic Injury Disaster Loans & Loan Advance

The loan advance program offers up to $10,000 to small business owners across the United States. The eligibility requirements are similar to those for Paycheck Protection Program loans. These loan advances don’t need to be repaid, and you can receive the money within days of applying.

After getting your advance, you can go through the full disaster loan process, borrowing up to $2 million from the SBA at a rate of 3.75% and at terms up to 30 years.

The SBA website has more information about both the Disaster Loan program and the Loan Advance program. Additionally, you can check out our guide on SBA disaster loans and FEMA assistance.

SBA Debt Relief

If your business borrowed or borrows money from the SBA, you might be eligible for SBA debt relief programs that can repay your loan balance or let you defer payments.

SBA Serviced Disaster Loans that were in regular service status before March 31st receive automatic deferments until December 31st, 2020. Interest will continue to accrue, but you don’t have to make payments. The SBA will pay the interest and principal for current and new 7(a), 504, and microloans for the next six months.

The SBA website has more information about its debt relief options.

SBA Express Bridge Loan

Small Business Administration bridge loans give companies that already work with SBA lenders quick access to up to $25,000 in loans. These bridge loans are intended for quick funding while owners apply for disaster loans.

SBA Express Bridge Loans let lenders offer guaranteed loans more quickly than usual, giving businesses needed emergency funds.

The SBA has more information about the Bridge Loan Program.

Local Assistance Programs

The Federal Government and Small Business Administration have many options for business owners in need of assistance, but many states have also started assistance programs. If you live in an area with state assistance programs, there’s no reason that you can’t take advantage of both forms of help.

For example, businesses in New York City, one of the hardest-hit areas, can apply for grants of up to $27,000 to cover part of their payroll costs.

Many private banks and even corporations such as Amazon and Facebook have come up with assistance programs. Check with your local government and banks to see if they’re offering any help and keep an eye out for other assistance programs that may become available.

Additional resources:

Author: TJ Porter

TJ is a Boston-based freelance writer who specializes in credit, credit cards, and bank accounts. He graduated with a degree in business from Northeastern University and has been featured on Credit Karma, DollarSprout, and Bankrate.