The times of the coronavirus pose immediate threats to the small business world. Given the economic gravity of this situation and the outstanding backlash the virus will have on the small business sector, the government has approved its largest stimulus package to date. As a part of the $2 trillion dollar stimulus package (CARES Act), over $350 billion dollars has been designated by congress to small businesses. As a small business owner, here is what you need to know:

How it works (the two federal loans you need to know about):

Under the PPP (Paycheck Protection Program Loan Guarantee), companies with fewer than 500 employees or less are eligible for loans via banks and credit unions of up to $10 million dollars each. Additionally, 501(c)(3) nonprofits with fewer than 500 employees and some 501(C)(19) veteran organizations are eligible. Self-employed, sole proprietors, freelance workers and gig economy workers are also eligible for the loans as long as they’ve registered as a business prior to February 15th, 2020.

These loans from the government are “forgivable” loans, meaning if they are used to pay people who make less than $100,000 annually, or for rent and utilities, owners do not have to repay the money. This loan will also allow employers to continue to provide paid sick leave, health care benefits and other benefits for their employees. The borrower has 10 years to repay the government at 4% interest however, part of this loan may be forgiven if spent on the first eight weeks on operating expenses.

The trickle down effect of the strain on small businesses due to coronavirus has staggering implications for the American people, as small businesses employ 60 million Americans. The idea of this loan program is to prevent owners from laying off their employees and be prepared for business when lockdowns are lifted.

The second loan that is crucial for small businesses to be aware of is the SBA’s Economic Injury Disaster Loans with an allotment of $10 million. The EIDL loans are up to $2 million dollars with a 30 year term, 3.75% interest for small businesses and 2.75% interest for nonprofits.

An applicant can be approved on credit score alone, without the risk of bankruptcy as a disqualifier. Borrowers can also receive $10,000 as an emergency cash grant that can be forgiven if spent on paid leave, maintaining payroll, increased costs, mortgage or lease payments. Sole proprietors or independent contractors, as well as tribal businesses, cooperatives, and ESOPs with fewer than 500 employees and all non-profits including 501(c)(6)s are eligible for the loans through the SBA. There is a lot of variety in who can be a borrower in this context.

How long will the money last?

The loans that are designed to keep employees of small businesses on payroll will last until June. Hopefully, by then we will have returned to partial normalcy because the loans are built to help businesses stay afloat by treading water, not deep-sea diving. Businesses are being urged to contact their landlords, banks, and credit card companies to ask for extensions on payments, which are generally being granted. 

The future for small businesses may look grim in the wake of a pandemic that turned the entire world upside down. However, there are resources out there for small businesses to take advantage of to help keep their business afloat in the face of uncertainty. There is hope and available funding, as the small business industry is what keeps our country alive and prospering. 

More Resources

Become a client of WBCUtah and our business advisors can help you work through the applications for these loans. Already a client? Meet with Clancy or Debbie anytime via Zoom video chat.

Visit Utah’s Coronavirus page: https://coronavirus.utah.gov/business/

Visit our COVID-19 page: http://wbcutah.org/covid19