With the passage of the CARES Act, federal resources for small businesses affected by COVID-19 are becoming available. The NoHo BID is committed to connecting our businesses to resources from all levels of government, if you have any questions, please reach out to us. This is just the beginning, and we will be sending out more information as it becomes available. To check your eligibility, check the ‘eligibility’ section below.
$10,000 Economic Injury Disaster Loan Advance: All businesses eligible for the Economic Injury Disaster Loan (EIDL) are able to receive up to $10,000 in the form grant that does not need to be repaid. Disbursement is almost immediate, within three days of your application’s completion**. While the EIDL program is not accepting new applications, these advances are still being paid out. You do not need to repay this advance, even if you are denied a loan or choose not to accept the loan package you are ultimately offered. Up to $1,000 per employee is available, so if you have 20 employees, you can apply for the entire $10,000, but if you have 5 employees you would only be eligible for $5,000. To apply you must gather accurate figures for your gross revenue and cost of goods sold for 2019 and 2020.
This is the initial application for EIDL loans, which is where you apply for the Advance, has been dramatically streamlined, and takes under 10 minutes. Apply here and make sure to ‘check’ the box stating you’d like to receive the Advance. You are eligible if you are a retail store, sole-proprietors, commercial entity like real estate leasing agencies, or nonprofit, though some other types of businesses are eligible to apply for EIDL if they are under 500 employees.
Economic Injury Disaster Loan (EIDL): If you applied for the Advance, you have already completed the initial application for EIDL, it’s the same form. This program is not currently open to new applicants. The SBA is processing applications that haven’t yet been filled, but we will update this page when new applications are allowed. However, unlike the Advance, you will need more documentation later on in the process to secure an EIDL. Eligible businesses may receive up to $25,000 in loans. We are strongly encouraging businesses to prepare the documents listed at the end of this article.
Paycheck Protection Program: The Paycheck Protection Program (PPP) is a forgiveable federal loan program administered through lenders designed to help small businesses keep staff on payroll. If you have under 500 employees, you are eligible, even if you are a sole-proprietor, independent contractor or self-employed. Businesses will be eligible to recieve up to 2.5 times one month’s average pay in the form of a loan. The loan includes lost tips from customers, benefits paid by the employer like retirement and healthcare, and state and local taxes on compensation, up to 2.5 times the average monthly salary. However, compensation is capped at $100,000 per employee.
However, if you spend at least 75% of the loan on payroll for staff, do not decrease salaries or head count, and pay staff for at least eight weeks, the loan is entirely forgivable and you will not need to repay anything. Not meeting these criteria will lower the forgivable portion of the loan. This loan may also be spent on utilities, rent, or mortgage interest. This program is still coming online, so we’re strongly encouraging businesses to begin having conversations with their lenders regarding the PPP, even if they are not yet offering it. Details are available here.
Small Business Debt Relief: The Federal SBA is automatically will automatically pay all the interest, taxes, and fees on most existing SBA loans through September 27th, 2020, including any new loans issued before that date. No action is required from you to get this benefit. Any current SBA Disaster Loans are also automatically deferred in this time period, and will continue to accrue interest. For more information, click here.
Express Loans: If you need a fast infusion of cash into your business, you have the option to apply for the Express or Export Express loans through the SBA. Initial approval can be given 24 hours for up to $500,000. Most terms of the loan are determined through negotations with your lender, so there is little explicit insight we can provide here. Learn more here.
Documents You May Need: This is not a complete list, however as a general guide we encourage you to prepare as many of these forms as you can for all of these programs.
- Most Recent Federal Tax Returns for Principals and Owners
- Quarterly Wages Documentation (IRS Form 941)
- Calendar Year Wages (IRS Form 944)
- Documentation of the Number of Full Times Employees (SBA Form 2843)
- CPA Certified Statement of Profit/ Loss
- Personal Financial Statement (SBA Form 413)*
- Schedule of Liabilities (SBA Form 2202)*
- Sales Figures Showing Economic Injury (SBA Form 1368)*
*These are the forms we believe you will need. Though you may be given an updated version, these are a good guide.
** This is what the government is telling businesses to expect. We are hearing from others that due to system overload, it’s taking significantly longer.