Dear Neighbor,
Many small businesses which have had to close or suffered a massive loss of income are eligible for some state assistance, and many programs under the new federal CARES Act. Here are some of the resources available.
Paycheck Protection Plan
One of the most popular programs created by the CARE Act is The Paycheck Protection Program,designed to incentivize small businesses to keep workers on the payroll. Loans are up to $10M, with a 1% interest rate and no payments for the first six months. I love the idea of keeping people working and attached to their employer; apparently small business owners love it too.
The loans will be forgiven and turn into grants if all employees are kept on the payroll for 8 weeks and the money is used for payroll, rent, mortgage interest, or utilities. The program will be available retroactive from February 15, 2020, so employers can rehire their recently laid-off employees through June 30, 2020.
Businesses, non-profits, sole proprietorships, self-employed individuals, and independent contractors, with 500 or fewer employees can apply.
You can apply for the Paycheck Protection Program through any existing SBA 7(a) lender or through any participating federally insured depository institution, federally insured credit union, or Farm Credit institution. You can find a lender here. It's probably best to start with a bank you have a relationship with.
Many people have found it hard to access these loans, as the Globe reported today. The program has been extremely popular, so much that Treasury Secretary Mnuchin is asking Congress to provide more funding and the Federal Reserve is offering to backstop the program.
An overview from the SBA is here. And useful notes from DigBoston.
And here's the most recent information, thanks to Congresswoman Katherine Clark's office:
https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp
https://connect.sba.gov/
Employee Retention Tax Credit
This is another provision of the CARES Act, also designed to incentivize employers to keep employees on the payroll instead of laying them off. It's available for struggling businesses, including non-profits that aren't eligible or choose not to participate in the PPP. Businesses with a drop in revenue are eligible for a 50% refundable tax credit for wages paid to furloughed or reduced-hour employees up to a total of $10,000 per employee. More information here.
SBA’s Economic Injury Disaster Loan (EIDL) program
The SBA will offer low-interest federal disaster loans for working capital to Massachusetts small businesses suffering substantial economic injury as a result of the Coronavirus emergency. Businesses with fewer than 500 employees, independent contractors, non-profits and self-employed are eligible for loans of up to $2 million. Recipients remain eligible for the PPP, disaster loans, and regular SBA-backed loans.
The interest rate is 3.75% for small businesses; for private non-profits it's 2.75% with up to 30 years.
Applicants may apply online, receive additional disaster assistance information and download applications at https://disasterloan.sba.gov/ela. Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email disastercustomerservice@sba.gov for more information on SBA disaster assistance. Individuals who are deaf or hard‑of‑hearing may call (800) 877-8339.
Here's a fact sheet on the EIDL.
SBA Economic Injury Disaster Loan Advance
The Economic Injury Disaster Loan Advance is a Loan Advance of $10,000 that is available to applicants who have been approved for an Economic Injury Disaster Loan; it does not need to be repaid, so you can think of the Advance as a grant for business expenses. If you have applied or intend to apply to the Economic Injury Disaster Loan program, you can also apply for a Loan Advance. Visit the SBA’s website to submit an application for the Economic Disaster Injury Loan and Loan Advance.
SBA Express Bridge Loan Program
The Express Bridge Loan Program is available to businesses that have an existing business relationship with an SBA-approved lender; speak to your lender about accessing this option while you await a decision on long-term financing.
The SBA is also offering Debt Relief to small businesses. Under this relief, the SBA will pay the principal and interest for six months beginning March 27th, 2020 for qualifying new and current holders of 7(a) loans. Reach out to your SBA lender to discuss how this debt relief applies to your loan. This debt relief is available only to 7(a) loans and not to loans made under the Paycheck Protection Program, 504 loans, or microloans.
Other resources for small employers:
Unemployment Assistance's WorkShare program can help employers avoid layoffs. Employees work reduced hours while collecting unemployment benefits to supplement their lower wage
MassHire is offering a Rapid Response program, which works closely with companies to avert layoffs and keep a skilled workforce engaged in the existing regional economy or industry.
Here is the state's guidance and resources page for small businesses.
Tax Postponement for some small businesses
Massachusetts is postponing the collection of regular sales tax, meals tax, and room occupancy taxes that would be due in March, April and May so that they will instead be due on June 20. All penalties and interest that would otherwise apply will be waived.
Businesses that paid less than $150,000 in regular sales plus meals taxes or room occupancy taxes in the year ending February 29 will be eligible for relief for those taxes.
Paid sick leave
The first federal COVID-19 bill establishes a federal emergency paid-leave benefits program to provide payments to some employees.
It requires employers with fewer than 500 employees to provide two weeks' worth of paid sick leave if employees are unable to work because they're subject to quarantine or isolation, are experiencing symptoms of COVID–19, are caring for someone who is in quarantine or isolation and/or have children in schools that have closed.
The legislation also gives up to three months of paid family and medical leave, equivalent to no less than two-thirds of the person's pay.
Employers themselves will receive tax credits to offset the costs of providing this paid leave.
Under the legislation, an employer cannot require employees to find a replacement worker for themselves or require them to use other paid time off.For those who are self-employed, there will be a tax credit equivalent to the sick leave amount.
Eversource payment arrangements for small business customers
Eversource is offering small business customers $0 down payment and a one-year payment arrangement, with the first payment not due until June 1. This option is obviously just a temporary solution.
I'll be writing soon about other corona-related topics, including who's left out.
Please stay in touch and let me know how my staff and I can help.
Stay safe!
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