Coronavirus relief for small businesses

By LINDA CHION KENNEY

The eagerly anticipated CARES Act has passed and with it comes a scrambling to makes sense of who benefits and how with the programs created in the unprecedented $2 trillion stimulus package.

Toward that end, Inc. magazine and the U.S. Chamber of Commerce on March 27 hosted the first annual National Small Business Town Hall, taking a look at the wide-ranging benefits found in the 880-page Coronavirus Aid, Relief and Economic Security Act, with an emphasis on those that benefit businesses with fewer than 500 employees.

According to Neil Bradley, the chamber’s executive vice president and chief policy officer, the “single most important” element in the act for small business owners is the Paycheck Protection Program, which provides federally-guaranteed loans for up to $10 million to eligible businesses, which can be partially forgiven for businesses that retain or bring back laid-off or furloughed employees.

“There’s $350 billion provided for this program, which is roughly the entire payroll for all small businesses under 500 employees in the nation for six weeks,” Bradley said. “So that’s an impressive amount of money that’s going to be available to small businesses across the country to really help them weather this downturn.”

Most notably, applying for this aid requires no personal guarantee or collateral to secure the loan, no requirement that you try first to get a loan elsewhere and only good-faith attestations that businesses “need the money as a result of an economic impact that they’re currently experiencing, or expecting to experience, because of the coronavirus,” Bradley said.

He noted that loans, with interest set at no more than 4 percent, will be provided to cover two- and a-half months of payroll expenses for employees who make under $100,000, as well as the pro rata costs of health care expenses and other benefits, such as sick leave.

Small businesses that normally qualify for a Small Business Administration (SBA) loan are qualified for the program, as well as 501(c)3 nonprofits, certain veterans organizations, sole proprietors, the self-employed and independent contractors. “So it’s pretty expansive,” Bradley added, “the broadest sense of small business that you can think of.”

Applicants will have to prove they were in business before Feb. 15, and independent contractors, sole proprietors and the self-employed will have to provide documentation that this is how they traditionally receive income, Bradley said.

Moreover, he added, for businesses in the food service and accommodation industries, the head count will be based on the number of employees at a particular location — and not aggregated up to include multiple locations.

As for loan forgiveness requirements, Bradley said the general rule is to look at expenses for the eight-week period following the loan’s origination, including payroll, rent and utility expenses and any interest paid on mortgage debt. “We start with the assumption that dollar-for-dollar, for those expenses, you can get a dollar of your loan forgiven, no more, of course, than the maximum amount that you borrowed in the first place,” Bradley said.

There is an important caveat, he added, and it pertains to payroll and a business owner’s attempts to retain their employees.

“If you’ve reduced head count then they’re going to reduce the amount of loan forgiveness that’s available to you,” Bradley said. “Of, if you cut wages for individual employees who already make less than $100,000 by more than 25 percent, they’re going to reduce the dollar value of your loan forgiveness.”

Also, “if you’ve already let go of employees and you’re bringing them back, you’ll actually get more credit for that in this process,” he added. “You won’t be penalized for the fact that you already let somebody go and now you’re trying to bring them back.”

In addition to CARES Act relief, the SBA offers its own basket of loans, including the Economic Injury Disaster Loan (EIDL), which now, in response to the COVID-pandemic, allows small business owners an advance of up to $10,000, even if they have an application that is pending or was declined.

To apply for the Paycheck Protection Program Loan Guarantee and Forgiveness, the U.S. SBA Economic Injury Disaster Loan (EIDL) or the Florida Small Business Emergency Bridge Loan (EBL), visit www.FloridaSBDC.org. For questions concerning which loans are better suited to your needs and whether applying for one precludes aid from another, contact your local SBDC office.

Call Florida SBDC at USF, 813-905-5800. For coronavirus guidance from the U.S. Chamber of Commerce, visit www.uschamber.com/coronavirus. For the chamber report, “Coronavirus Emergency Loans: Guide and Checklist for Small Businesses,” visit https://uscham.com/2JsMXnR.