Financial Relief for Small Businesses - A Comprehensive Guide

Like you, we are concerned about the Coronavirus’ impact on the health of our communities. We are also concerned, however, about its longterm effect on the local economy. We are all disappointed about lost business momentum and the adverse impact on our staff and families. We must, however, take this seriously and continue to practice social distancing and do whatever it takes to reduce the spread of this virus.  

 The government has created several plans to help small businesses and non-profit organizations get through these times. The information below lists some of the packages into one place to give you access to the ones that are best suited for you.

Financial Relief – Care Act

NYC Employee Retention Grant Program

The City is offering small businesses with fewer than five employees a grant to cover 40% of payroll costs for two months to help retain employees.

Eligibility Criteria for the NYC Employee Retention Grant Program

Businesses, including non-profits, must:

·         Be located within the five boroughs of New York City

·         Demonstrate that the COVID-19 outbreak caused at least a 25% decrease in revenue

·         Employ 1-4 employees in total across all locations

·         Have been in operation for at least six months

·         Have no outstanding tax liens or legal judgments

Learn more and Apply

NYC Small Business Continuity Loan Fund

Businesses with fewer than 100 employees who have seen sales decreases of 25% or more will be eligible to apply for zero-interest loans of up to $75,000 to help ensure business continuity.

Eligibility Criteria for the NYC Small Business Continuity Loan Fund

Businesses must:

·         Be located within the five boroughs of New York City

·         Demonstrate that the COVID-19 outbreak caused at least a 25% decrease in revenue

·         Employ 99 employees or fewer in total across all locations

·         Demonstrate the ability to repay the loan

·         Have no outstanding tax liens or legal judgments

Learn more and Apply

U.S. Small Business Administration (SBA) Economic Injury Disaster Loans and Loan Advance

Small business owners in New York are currently eligible to apply for a low-interest loan due to Coronavirus (COVID-19) through the U.S. Small Business Administration (SBA). Learn more and Apply

Financial Relief - Other

SBA Debt Relief Program

The SBA Debt Relief Program gives immediate relief to borrowers with existing SBA 7(a) loans, 504 loans, and microloans. For these current borrowers, the SBA will cover all loan payments for the next six months. This includes principal, interest and fees. This relief is also available for businesses who take out new loans within six months of the CARES Act being enacted. This debt relief is automatic, but make sure to check with your lender to make sure. Check with your bank or lender to see if they offer these loans or contact SBA to find one.

SBA Express Bridge Loans

SBA is also offering express bridge loans for businesses negatively impacted by the COVID-19 pandemic. This is an expansion of a program launched in 2017. These loans, for up to $25,000, are to help small businesses get through a presidential-declared disaster, in this case the pandemic. Loans for the COVID-19 pandemic can be made through March 13, 2021. The maximum term of the loan is seven years. These loans can be used as a stop-gap while you wait for a larger Economic Injury Disaster Loan (EIDL). Then you can use an EIDL to repay the express bridge loan in full or in part. These loans are offered by local banks and lenders, or the SBA can help you find a lender.

SBA 7(a) Program

The SBA’s 7(a) program is an existing loan program available to small businesses. The Paycheck Protection Program (PPP), described above, is running on the existing 7(a) program’s infrastructure. These non PPP loans can be for up to $5 million and are guaranteed by the SBA for between 75% and 85% of the loan. SBA has a list of banks who are able to give out 7(a) loans. You may be better off looking for loans under the PPP, but 7(a) loans are still an option. Similarly to the other programs, these loans are offered by local lenders and banks.

Express Loan Program

The Express Loan Program is a type of 7(a) loan. These loans are for up to $350,000 and are guaranteed at 50% by the SBA. The upside is that the decision to make the loan is made by the lender rather than the SBA, and is made within 36 hours. Again, the PPP may make more sense if you are dealing with fallout from the COVID-19 crisis, but these express loans may still be an option. These loans are given by local lenders.

Community Advantage Loan Program

Using the same general rules as the 7(a) program, Community Advantage loans are for up to $250,000 and are for businesses in underserved markets. The loan application is here.

504 Loans

504 loans are designed to foster economic development and job creation. These loans can only be used for the acquisition or eligible refinance of fixed assets. These loans are generally capped at $5 million. Apply for 504 loans here.

Microloans

Microloans are made through non-profit lending organizations to underserved markets. Loans can be for up to $50,000 and the average loan size is $14,000. Find a local microloan provider here.

Helpful tools and Links

Guidance for Business Owners - Guidance and Frequently Asked Questions

Sign up to receive updates from NYC SBS- Sign up to receive updates from SBS

EMERGENCY PLANNING PROCESS CHECKLIST- Business Continuity Planning Checklist

BUSINESS PANDEMIC INFLUENZA PLANNING CHECKLIST- Business Planning Checklist for Pandemics

US Chamber of Commerce Coronavirus Emergency Loans Small Business Guide and Checklist- Click here

Two major changes due to Care Act

Business tax changes- The CARES Act makes select changes to taxes and tax policies in order to ease the burden on businesses impacted by COVID-19. These changes include:

·       Businesses are eligible for an employee retention tax credit if 1.) your business operations were fully or partially suspended due to a COVID-19 shut-down order; or 2.) gross receipts declined by more than 50% compared to the same quarter in the prior year. Eligible businesses can get a refundable 50% tax credit on wages up to $10,000 per employee. The credit can be obtained on wages paid or incurred from March 13, 2020, through December 31, 2020.

·         Businesses and self-employed individuals can delay their payroll tax payments. These payments, the employer share of Social Security tax owed for 2020, can instead be deferred and paid over the next two years. Fifty percent must be paid by the end of 2021 and 50% must be paid by the end of 2022. (Note: The ability to defer these taxes does not apply to a business that has a Paycheck Protection loan forgiven.)

·         Businesses that have net operating losses (NOLs) have some limitations relaxed. If your business had an NOL in a tax year beginning in 2018, 2019, or 2020, that NOL can be now be carried back five years instead. This may improve cash flow and liquidity for some businesses. Pass-through businesses and sole proprietors will also be able to take advantage of the relaxed NOL limitations.

·         Businesses that were due to receive corporate alternative minimum tax (AMT) credits at the end of 2021 can instead claim a refund now, in order to improve cash flow during the COVID-19 emergency.

·         Businesses will be able to increase their business interest expense deductions on their tax returns. For 2019 and 2020, the amount of interest expense businesses are allowed to deduct on their tax returns is increased to 50% from 30% of taxable income.

·         Businesses, especially those in the hospitality industry, will be able to immediately write off costs associated with improving facilities, increasing cash flow.

·         The government will make a temporary exception from the excise tax normally applied to alcohol, if that alcohol was used to produce hand sanitizer in 2020.

Many of these changes will apply to small businesses all over the country, so it is vital to discuss with a tax professional which can apply to your company.

Changes to paid sick leave and paid FMLA leave from the Families First Coronavirus Response Act. The CARES Act makes small changes to the Families First Coronavirus Response Act (FFCRA) in regards to paid sick leave, paid FMLA and more. These changes include:

·         Paid family and medical leave (FMLA) under the FFCRA is capped at $200 per day and $10,000 total per employee.

·         Paid sick leave under the FFCRA is capped at $511 per day and $5,110 total per employee. This amount drops to $200 per day and $2000 total for sick leave taken by an employee in order to care for a family member in quarantine or care for a child whose school has closed.

·         Workers that were laid off after March 1, 2020, but then rehired, are eligible for paid FMLA leave provisions described in the FFCRA immediately instead of needing to be an employee for 30 days.

·         Businesses can keep money that they would have deposited for payroll taxes in anticipation of refunds from the Treasury Department for paid sick leave and paid FMLA leave outlined by the FFCRA, including amounts that would have been refunded later.

Benefits for Employees

For a graphic that explains employee benefits click here and here.

State Specific Relief.

California

A number of programs are available in California, one of the states most impacted by the COVID-19 pandemic.

San Francisco has a Small Business Resiliency Fund for businesses that have between one and 25 employees, have less than $2.5 million in gross receipts and can demonstrate a loss of revenue of 25% or more. To apply for this program, click here.

Los Angeles is offering microloans to small businesses of between $5,000 and $20,000. The term goes between six months and five years. The rate is 0% for a term of between six months and one year and between 3% and 5% for loans with a term of between one year and five years. Up to $11 million in these loans will be available.

 New York

There are a few New York State coronavirus relief programs aimed at helping small businesses.

The following programs are available in New York:

• New York City Employee Retention Grant Program. This is for businesses within the five boroughs of New York City with between one and four employees who can demonstrate that COVID-19 has caused at least a 25% drop in revenue. Businesses must have been in operation for at least 6 months. Businesses can get a grant covering up to 40% of their payroll, capped at $27,000. Apply here.
• New York City Small Business Continuity Loan Fund. This program is for businesses located in New York City with fewer than 100 employees who have lost at least 25% of revenue because of the pandemic. The program offers zero-interest loans for up to $75,000. Fill out the pre-application here.

Outside of official government programs, there are other places providing help to small businesses. If you run a non-profit, you may be eligible for a loan from the New York Community Trust. The James Beard Foundation is providing help to small independent restaurants impacted by the crisis. Non-profit organization Southern Smoke is helping both restaurants and their employees.

The federal CARES Act also has $5 billion earmarked for the New York State government. There hasn’t been any announcement yet as to what that will fund, but it must go directly to COVID-19 relief.

 As always, we are here to help you with any small business questions especially through this tough time. Please feel free to share any information that may be missing from this list. Also, share this article with your community. We're all in this together!

Sincerely,

 Janneh K. Wright