Mandatory closures and safety measures implemented due to the COVID-19 pandemic have impacted almost all industries. This is especially true for small and medium-sized businesses that are working with limited resources. As business owners focus on recession planning, it is helpful to be aware of the various relief programs offered by the federal, state, and local governments across the U.S.
There are different programs for you to consider, from Congress pledging a stimulus package and several states introducing their own relief funds. We’ve compiled a comprehensive list of federal, state, and lender-specific COVID-19 relief programs you can pursue.
In part 1 of this two-part series, we will discuss federal loan and debt relief programs that are applicable to SMBs. In part 2, coming next week, we will discuss the state and local government offers.
1. Paycheck Protection Program
The Small Business Administration (SBA) has rolled out multiple programs that can aid your recession planning. The Paycheck Protection Program aims to help millions of small business employees. The program has authorized up to $349 billion toward job retention and other expenses.
Under this program:
- You may qualify for a loan of up to $10 million. The amount of loans is determined by eight weeks of prior average payroll plus an additional 25% of that amount.
- Your loan payments will be deferred for six months.
- If you don’t let go of any of your employees, SBA will forgive the loan amount that goes into covering the first eight weeks of salaries.
The following parties are eligible for the program if they meet the program requirements:
- Small businesses
- Eligible nonprofit organizations
- Veterans organizations
- Tribal businesses as described in the Small Business Act
- Self-employed individuals
- Independent contractors
2. Economic Injury Disaster Loans and Loan Advance
These loans are designed to help compensate for the temporary loss of revenue that small businesses are experiencing. All small business owners from all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. You won’t have to repay the loan advance.
You may also apply for a working capital loan of up to $2 million. The loan amount you are approved for depends on your economic damages and the ability to repay later on.
There is an interest rate of 4% and the repayment term is for a period of up to 30 years. The funds will be available after three days of a successful application.
3. SBA Debt Relief
To offer some reprieve to small businesses, this program offers the following:
- SBA will pay the principal and interest of new 7(a) loans issued prior to September 27, 2020.
- SBA will pay the principal and interest of current 7(a) loans for a period of six months.
4. SBA Express Bridge Loans
This loan type is for small businesses that already have a business relationship with an SBA Express Lender and provides a quicker route to funding. The Express Bridge Loan Pilot Program enables access of up to $25,000, with less paperwork involved.
You can apply for the Express Bridge loan if you are in need of urgent cash while you wait for a decision on a direct SBA Economic Injury Disaster (if you have applied for one).
The terms include:
- Fast turnaround
- Loan be repaid in full or in part by the proceeds the EIDL loan
To find an Express Bridge Loan Lender, connect with your local SBA District Office.
5. Employee retention tax credit
Disclaimer: You cannot qualify for this program if you are also getting a loan through the Paycheck Protection Program (hyperlink back to part 1 where this is discussed).
If you’re a business or nonprofit organization that is retaining its employees during this health crisis, you can get a refundable payroll tax credit. The credit will be available through for qualified wages paid between March 13, 2020 to December 31, 2020. It is equal to 50% of quarterly employee wages, up to a maximum of $10,000 per worker.
The program does not take into account the company’s size. However, there are other factors that affect the eligibility of parties:
- The business is fully or partially suspended because of a governmental order related to COVID-19.
- Has experienced a significant decrease in gross revenues.
While the program applies to companies of all sizes, small businesses are still at an advantage here. If your business has 100 or fewer employees, whether they are working or not, the tax credit applies to all employee wages.
6. Federal Income Tax Filing and Payment Deadline Extension
Recession planning and tax filing have hit companies at the same time. That is why the federal tax return filing deadline has been extended to July 15, 2020 now. This extension is meant to provide some relief to businesses and individuals that are already under pressure during this pandemic. The IRS has also extended the deadline for tax payments of up to $10 million to July 15, 2020, for both individuals and businesses.
7. Banks Offering Small Business Assistance Programs
The FDIC is encouraging banks to work with customers to provide COVID-19 related support, for both personal and business finances. You can find out if your bank is offering any assistance by visiting the American Bankers Association’s A-Z list of coronavirus response programs.
At EZRentOut, we’re here to help
We realize that rental businesses around the world are facing unprecedented challenges due to the spread of COVID-19. This is going to be a period of significant transition for all of us. At EZRentOut, we are committed to helping you succeed during this uncertain time. Use our cloud-based rental asset management solution to:
- Retain and grow customers with a custom Webstore and customer rental portal. Reserve rental assets and receive payments online.
- Enable remote assets usage – track and protect your rental assets from anywhere.
- Manage remote employees with customizable digital communication and alerts.
- Carry out maintenance events across the organization.
- Control budgets and costs through business reports.
If you have any questions, please contact our customer support team at firstname.lastname@example.org. We are always available to help.