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On Friday, March 27th, the Coronavirus Aid, Relief, and Economic Security (CARES) Act–Congress' third stimulus package–was signed into law. The $2 trillion CARES Act is the largest aid package in American history, and it provides substantial relief for small businesses that have been impacted by the Coronavirus (COVID-19) pandemic.
Democrats were able to make significant improvements to the original Senate bill drafted by Leader Mitch McConnell. In total, the CARES Act contains more than $376 billion in relief for small businesses, creating new access to capital and reinforcing existing Small Business Administration (SBA) operations and programs.
This includes:
·$349 billion for forgivable loans to small businesses to keep employees on the payroll;
·$17 billion in debt relief for small businesses with existing SBA loans;
·$10 billion in immediate disaster grants for small businesses that apply for the SBA Economic Injury Disaster Loans (EIDLs) Program;
·$265 million in funding for SBA resource partners including Small Business Development Centers and Women’s Business Centers to provide counseling to small businesses impacted by COVID-19;
·$10 million in funding for Minority Business Development Agency grants to counsel minority-owned small businesses;
In order to help small businesses face the unprecedented economic fallout of the COVID-19 crisis, and to better understand the resources and financial support under the CARES Act, I wanted to provide you with some information that my office has put together to both explain what is available and point you in the right direction for assistance.
o Paycheck Protection Program (PPP) Loans (Emergency SBA 7(a) Loans)– Provide access to capital to cover the cost of retaining employees. Up to 100% of PPP loan principle can be forgiven if borrowers follow the PPP forgiveness guidelines.For more information from the SBA, click here. To apply, click here. For more information from my office, click here.
o Emergency Injury Disaster Loans and Emergency Economic Injury Grants(SBA 7(b) Loans)– Low-interest federal disaster loans of up to $2 million, with quick access to small amounts of capital to cover your costs right now. For more information from the SBA, click here. For more information from my office, click here. To apply, click here.
o SBA Debt Relief Program– Will provide immediate relief to small businesses with many non-disaster SBA loans, including principal, interest, and fees, within six months of March 27, 2020. For more information from the SBA, click here. For more information from my office, click here.
o SBA Express Bridge Loans – Allows small businesses who currently have a business relationship with an SBA express lender to access up to $25,000 quickly. For more information from the SBA, click here.
o Small business counseling and training– Free counseling and training to assist you in navigating the economic impacts of COVID-19. To find local assistance through the SBA, click here. For more information from my office, click here.
o Minority Business Development Agency (MBDA) counseling and training– The CARES Act provides funding for counseling and training to specifically assist MBDA clients. To find your local MBDA business center, click here.
In the coming weeks and months, more programs and support will be available for small businesses dealing with the COVID-19 crisis.
New York City is also offering assistance to small businesses through the Department of Small Business Services in what is called the NYC Small Business Continuity Loan Fund, which provides zero-interest loans of up to $75,000 to help retain employees and ensure business continuity for eligible businesses with fewer than 100 employees who have seen sales decreases of 25% or more.
Frequently Asked Questions for Small Businesses
I need help with Commercial Rent. What resources are available to me?
You may also be eligible for assistance immediately through the SBA’s Economic Injury Disaster Loan (EIDL) Program, and through the SBA’s Paycheck Protection Program (PPP).
Additionally, on March 7, 2020, Governor Andrew Cuomo issued an executive order that enacted a statewide eviction moratorium for all tenants–residential and commercial–for 90 days.
I want to offer paid sick leave to my employees. How can I do that?
The Families First Coronavirus Response Act, signed into law on March 18, 2020, expanded access to emergency paid sick leave for as many as 87 million U.S. workers. Eligible full-time employees at businesses that employ fewer than 500 employees are entitled to up to two weeks (80 hours) of fully paid time off. Eligible part-time employees are entitled to fully paid time off for the typical number of hours that they work in a typical two-week period.
Employers initially pay for the cost of emergency paid sick leave themselves, but they will be fully reimbursed by the federal government within three months.
For more information, please click here.
Do private non-profit organizations qualify for SBA loans?
Many private non-profits are eligible for EIDLs (including Emergency Economic Injury Grants), the PPP, and the Debt Relief Program.
For more information about the eligibility of private non-profits for each program, please click here and here.
Larger private non-profits (500 -10,000 employees) will be able to secure loans through the Treasury Department’s upcoming Mid-Size Loan Program. This loan program was created in the CARES Act and expressly applies to non-profit organizations. I will update my website with more information when this program becomes available.
If my company is a VC-funded startup, can I still qualify for SBA loans?
Eligible VC-funded startups are eligible for EIDLs as well as Economic Injury Grants. While EIDLs over $200,000 require a personal guarantee that can be difficult for startups, EIDLs under $200,000 don’t require a personal guarantee or real estate as collateral.
Congress is awaiting guidance from the SBA regarding how the “Affiliation Rules”–or the rules the SBA uses to count employees to determine if the business is eligible for loans–impact the PPP.
On April 2, 2020, I joined my colleagues in sending a letter urging the SBA to issue a waiver to ensure that startups across the nation are eligible. You can view the letter here.
After the letter was received by the Treasury Department, Secretary Steve Mnuchin announced that the SBA will ensure that VC-funded startups are eligible for PPP loans. The SBA will be releasing further guidance in the near future.
My small business recently had to close due to COVID-19 but we cannot yet show the two months of revenue reduction that SBA requires for the Economic Injury Disaster Loan application. Do I have to wait two months to apply?
No, under the CARES Act, small businesses must show that the applicant’s business suffered “substantial economic injury” as a direct result of COVID-19. Small businesses do not need to show two months of revenue reduction.
Can I use SBA loans to cover the cost of employee group health plan premiums?
Yes, EIDLs and the PPP can be used to cover the cost of employee group health plans. For more information, please click here and here.
My business or nonprofit has more than 500 employees, am I able to access assistance?
Larger businesses and private non-profits (500 -10,000 employees) will be able to secure loans through the Treasury Department’s upcoming Mid-Size Loan Program. The program was created in the CARES Act. I will update my website with more information when this program becomes available.
Sincerely,
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