Federally sponsored economic relief programs for small businesses suffering from COVID-19 pandemic

April 1, 2020
Federally sponsored economic relief programs for small businesses suffering from COVID-19 pandemic

This message is being sent to all business clients regardless of entity type.  As we're sure many of you are aware, the federal goverment has been rolling out various progams to assist small businesses that are experiencing economic harm as a result of the COVID-19 pandemic.  Significant federal funds have been allocated to new Small Business Administration (SBA) loan programs as part of the Coronaviurs Aid, Relief, and Economic Security (CARES) Act to assist small businesses and their owners.  As many businesses have already seen sharp declines in revenues, these programs are designed to provide short-term working capital needs and keep workers working (or at least getting paid).  The goal of this email is to familiarize our clients with these various SBA disaster relief loan program options and provide links to useful resources.  As these programs are brand new, we certainly don't have answers to all of your questions but want you  to know we are here to assist.

• Eligible borrower is any small business with fewer than 500 employees - This includes corporations, LLCs, partnerships, sole proprietors, independent contractors and self-employed individuals.
• No personal guarantee or collateral is required.
• Borrower must certify that the uncertainty of current economic conditions make the loan request necessary to support ongoing operations AND the loan proceeds will be used to retain workers and maintain payroll or make mortgage, lease, and utility payments.
• Maximum loan amount = 2.5x average monthly payroll costs incurred during the year prior to loan date.
• Borrower is eligible for loan forgiveness equal to the amount spent on the following items during the 8-week period beginning on the loan date:  payroll (including benefits), interest on loans, rent and utilities.
• Payments are deferred for 6 months.
• 0.50% fixed interest rate.
• Loan is due in 2 years.
• Must apply for loan from an SBA lender.
• Loan applications accepted beginning April 3, 2020.

Links to websites with useful information related to the PPP are included below:

• US Chamber of Commerce - Coronavirus Emergency Loans - Small Business Guide and Checklist - Provides lots of useful information including what is included and excluded from 'payroll costs'.
• US Department of the Treasury - Paycheck Protection Plan Overview - The PPP loan application can be found here.

• Program provides working capital loans of up to $2 million to small businesses suffering a temporary loss of reveune due to the COVID-19 pandemic.
• Eligible borrower is any small business with fewer than 500 employees that has been in operation since January 31, 2020. - This includes corporations, LLCs, partnerships, sole proprietors, independent contractors and self-employed individuals.
• Loan must be applied for directly with the SBA (online submission is recommended).
• 3.75% fixed interest rate
• Payments can be deferred for up to 12 months.
• Any borrower is eligible for an emergency advance of up to $10,000 within 3 days of applying for an EIDL.  This advance does NOT need to be repaid.  To access the advance, the borrower must first request the EIDL and then request the advance.
• Maximum loan term is 30 years.
• There are no loan prepayment penalties.

Click on this link to access the Disaster Loan Application section of the SBA's website.  Here you can find more information regarding the EIDL program and submit your online application.

• Unemployment benefits are now available to 1099-MISC independent contractors and the self-employed.
• However, as of today the MA Department of Unemployment Assistance (DUA) has yet to update their systems to allow for self-employed individuals to file an unemployment claim.  The MA DUA notice states that they are awaiting federal guidance regarding the CARES Act unemployment application and eligibility requirements.  We sugget that if you are self-employed and have experienced an elimination or reduction in income due to COVID-19 that you check the MA DUA website on a daily basis.  You can click on this link to access the MA DUA resources for the self-employed.
• CARES Act to supplement weekly unemployment benefits by $600.
• CARES Act to provide 13 additional weeks of unemployment benefits once state unemployment benefits are exhausted.