COVID-19: Financial Programs for Small Businesses


 

We have been asked by consultants and from some of our small, fast growing clients about the federal and state programs to assist smaller businesses during these rough times.  Below you will find an overview on the federal programs that are special and short term as well as some examples of a couple of state programs just so you can see what they are like.

The state programs noted below are likely not your state programs, just examples. If you want us to, we would be glad to research your state and provide a summary of their programs.

Let us know if you think we might be helpful during these challenging times. Reach out to Gary Marx whose information is at the bottom of this page.

 

U.S. SMALL BUSINESS ADMINISTRATION (SBA): CARES ACT

 

Paycheck Protection Program

This loan program provides $349 billion for funding to small businesses with a total of 500 or fewer employees.  Restaurants and other hospitality industry companies with multiple locations are exempt from the employment requirement. The program offers loans of up to $10 million per business based on eight weeks of prior payroll plus and an additional 25 percent, up to $100,000 per employee. Loans may be used for salaries, paid sick leave or medical leave, insurance premiums, and mortgage rent and utility payments.

 

The SBA may forgive loans used for payroll, rent, mortgage interest, and utilities, and if the business maintains employment and wage levels for at least eight weeks.

 

Economic Injury Disaster Loans (EIDL)

In response to COVID-19, small business owners in all 50 states, Washington D.C. and U.S. territories are eligible for an EIDL advance of up to $10,000.

 

The SBA provides working capital loans of up to $2 million to small businesses and nonprofits affected by COVID-19.The interest rates on EIDL loans are3.75% for small businesses and 2.75% for nonprofits. The repayment of these loans is up to 30 years. Sole proprietors and businesses employing less than 500 employees qualify for EIDL, and loans under $200,000 do not require personal guarantees.

 

SBA Debt Relief

The Debt Relief program will pay the principal and interest of new 7(a) loans issued before September 27, 2020, and will pay the principal and interest of current 7(a) loans for six months.

 

SBA’s website https://www.sba.gov/funding-programs/disaster-assistance provides additional information about their loan programs.

 

NEW YORK CITY PROGRAMS

 

New York City Employee Retention Grant Program

Small business owners located in one of New York City’s five boroughs, in business for six months or more, and have a total of between one and four employees may be eligible for a grant of up to $27,000 to cover up to 40% of payroll costs for two months. Businesses must demonstrate a reduction in revenue of at least 25% of revenue as a result of COVID-19.

 

New York City Small Business Continuity Fund

Businesses with fewer than 100 employees may be eligible for up to $75,000 in interest-free loans to cover lost revenue due to COVID-19. Business must be located in one of the five boroughs and have a revenue loss of at least 25%.

 

Additional information about New York City programs may be found here: https://www1.nyc.gov/site/sbs/businesses/covid19-business-outreach.page

 

NEW JERSEY PROGRAMS

 

The New Jersey Economic Development Authority (NJEDA) has introduced several programs designed to assist small businesses affected by COVID-19. Below is a summary of the leading programs.

 

NJEDA Small Business Emergency Assistance Grant

A $3 million fund providing grants of between $1,000 and $5,000 per application to New Jersey-based companies that have between 1–10 full-time equivalent employees

 

NJEDA Small Business Emergency Assistance Loan

This $10 million loan program offers loans of up to $100,000 to New Jersey-based businesses that have been in business for at least one year and have less than $5 million in revenue. Companies must have a physical commercial location in the State of NJ. Home-based businesses are not eligible for this program.

 

NJEDA Small Business Emergency Assistance Guarantee Program

The guarantee program provides a 50% guarantee, not to exceed a total NJEDA exposure of $100,000, to lenders that will issue working capital loans or lines of credit to support business continuity for a range of COVID-19 related impacts to businesses (reduced revenue, employee shortage, supply chain impact, etc.) There are no NJEDA fees associated with applying for this program. Companies must provide CEO certification that best efforts to retain employees are made or a commitment to re-hire employees.

 

The NJEDA offers an “eligibility wizard” https://assistance.business.nj.gov/ that helps New Jersey businesses determine their eligibility for various federal and state programs.

 

PENNSYLVANIA PROGRAMS

 

COVID-19 Working Capital Access Program (CWCA)

A fund administered by the Pennsylvania Industrial Development Authority (PIDA) that makes $60 million available to provide interest-free loans (2% fixed for agricultural businesses) of up to $100,000 to Pennsylvania businesses, including retail and service businesses, with less than 100 full-time employees. Loans terms are three years with a 12-year amortization, and a balloon payment is due at the end of the third year. Eligible costs include working capital, including working capital incurred three months (six months for retail/service businesses) before the submission of an application. Certified Economic Development Organizations throughout the Commonwealth accept applications for this program.

 

Additional information relating to CWCA may be found at:

https://dced.pa.gov/programs/covid-19-working-capital-access-program-cwca/

 

For questions or to receive additional information, please contact:

Gary R. Marx, CEcD
Principal
609-651-0694
www.BlueCapEconomicAdvisors.com