Where to find coronavirus small business relief

Small businesses of all sorts continue to struggle due to the coronavirus pandemic. The good news is that there are a variety of COVID-19 relief opportunities available to those looking for financial help. From federal government assistance like the Paycheck Protection Program to small business grants and loans, there are a wide variety of options offered by the public and private sectors.

Starting with the Coronavirus Aid, Relief, and Economic Security Act, here’s a rundown of the many types of coronavirus aid and small business relief options available to you — along with advice on how to financially survive.

Paycheck Protection Program loans

Administered through the Small Business Administration, the Paycheck Protection Program is an SBA-backed loan available through March 31, though future legislation may extend that timeframe. It provides small business relief for companies that keep employees on their payrolls. PPP loans can be turned into a form of relief grant that doesn’t have to be repaid, provided certain conditions are met.

Who is eligible for PPP loans?

The following organizations may apply for a PPP loan:

• A small business with 500 or fewer employees located in the United States
• Sole proprietors, independent contractors, and self-employed individuals
• Section 501(c)(3) non-profits
• Section 501(c)(19) veterans organizations
• An SBA-designated tribal business
• Hospitality and food businesses with a NAICS code beginning with 72 and have fewer than 500 employees per location

How much can you get in a PPP loan?

Under First Draw PPP loan for businesses who have not received a PPP loan before, recipients can receive a loan that is 2.5 times their average monthly payroll costs, up to a maximum $20 million, for 8 to 24 weeks.

Payroll costs include:

• Salary, wages, commissions, and tips, up to $100,000 per employee per year (excluding independent contractors)
• Employee benefits including vacation, parental, family, medical, or sick leave costs
• Group health care coverage benefits, including insurance premiums and retirement
• State and local taxes on compensation

How can you get a PPP loan forgiven?

PPP recipients may apply for loan forgiveness at any time up to the maturity date of the loan. To do so, contact your PPP lender and fill out the required paperwork. You’ll have to meet the following eligibility conditions:

• Employee retention and compensation levels are maintained
• The loan is spent on payroll and other eligible operating expenses
• At least 60 percent of the loan is spent on payroll costs

How do you apply for a PPP loan?

The first step to getting a PPP loan is to answer a few questions and get matched with a lender. Once you’re matched, you will fill out an application. Every PPP loan application must include the following:

• Payroll data for the time covered
• Account statements or third-party payroll reports that verify this information
• Tax forms for the time covered by the loan

Second round PPP loans

If you’ve previously received a PPP loan, you may be eligible for a second. You can apply for a Second Draw PPP Loan of up to $2 million, with similar conditions as before.

Applicants for second draw PPP loans must meet the following criteria:

• Previously received a first draw PPP Loan and used (or will use) the full amount only for authorized uses
• Has no more than 300 employees
• Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020

Visit the SBA website to learn more on how to apply for a PPP loan.

Economic Injury Disaster Loans

COVID-19 Economic Injury Disaster Loans provide financial relief to help small businesses and nonprofits that are suffering from a loss of revenue from the pandemic.

EIDL’s are available to businesses with 500 or fewer employees, and proceeds can be used for normal operating expenses such as paying employee healthcare benefits, rent, utilities and fixed debt payments.

Loan terms are for 30 years, fixed at 3.75% for businesses and 2.75% for nonprofits, with no fees or prepayment penalties. Loans of more than $25,000 require collateral, such as machinery, equipment, furniture, etc. Payments can be deferred for one year, although interest will accrue.

For more information on EIDL’s and how to apply, check out the SBA’s website.

Shuttered Venue Operators grants

The Shuttered Venue Operators grant program provides COVID relief grants to a variety of small businesses, nonprofits, theatrical and artistic venues.

Those eligible for SVO grants include:

• Live venue operators, promoters, producers, and agents
• Performing arts organizations
• Museums, zoos, and aquariums
• Movie theater operators

Funds may be used to pay for ordinary business expenses such as payroll, rent, utilities, administrative costs, insurance, mortgage, and debt payments (excluding the prepayment of principal).

Applicants must have been in operation as of Feb. 29, 2020 and must not have applied for or received a PPP loan on or after Dec. 27, 2020.

The grant amounts available are:

• For those in operation as of Jan. 1, 2019, grants will be for the lesser of 45% of their 2019 gross earned revenue or $10 million.
• For applicants that began operation after Jan. 1, 2019, grants will be for six times their average monthly gross revenue for each full month of operation during 2019 or $10 million, whichever is less.

Grantees may not use these funds for buying real estate, making investments or loans, making payments on loans that began after Feb. 15, 2020, or for donating to political parties, candidates, or committees.

Recipients must also document their compliance with this program. Employment records must be kept for four years after the grant is received. All other records must be kept for three years.

The SBA is not yet accepting applications for this program but indicates that those who have suffered the greatest revenue losses will be given first priority. For scheduling and application information, visit the SBA’s Shuttered Venue Operators Grant webpage.

Get faster relief with SBA Express Bridge Loans

Small businesses that already have a relationship with an SBA Express Lender can gain quick access to loans up to $25,000 under the SBA’s Express Bridge Loan Pilot Program.

This option provides small business relief funds to help you overcome a temporary loss of revenue. They can be used as a term loan or for bridging the gap while you apply for an SBA Economic Injury Disaster loan.

The express loan can be repaid in full or in part with proceeds from a COVID-19 Economic Injury Disaster Loan. For more information, see the SBA’s bridge loan webpage.

SBA loan deferments

If you currently have an SBA loan, you may automatically receive additional small business relief. As part of the CARES Act, the SBA will pay six months of principal, interest, and fees for all 7(a), 504, and Microloans, although this does not apply to either PPP or EIDL loans.

This relief program originally applied only to loans that were fully disbursed before September 27, 2020. In December 2020, the program was extended to include loans approved but not fully disbursed prior to that time.

For loans that are not currently being deferred, the SBA will make monthly payments on all eligible loans for a maximum of six months. For loans that are already deferred, the SBA will begin monthly payments once the deferment period ends, for up to six months.

The SBA has already notified lenders that it will make these payments. Any payments collected after March 27, 2020 may be applied to the outstanding loan balance or returned to the borrower, at the borrower’s discretion.

Additional debt relief payments for 7(a), 504, and Microloan borrowers is also available beyond six months, as part of the Economic Aid Act. The amount of aid available depends on when the loan was approved and whether it’s start date was after February 1, 2021. To learn more about this additional relief, you should contact your lender.

Those with SBA Serviced Disaster (Home and Business) Loans can also receive automatic deferments through March 31, 2021, provided the loan was in “regular servicing” status as of March 1, 2020.

Loan interest will continue to accrue, and monthly payment notices will still be mailed. Any borrowers that have set up automatic payments are responsible for pausing or canceling them and restarting them once the deferment period ends.

Visit the SBA website for additional information on loan deferment options.

How to find relief grants for your small business

There are a wide variety of small business grants available through public and private organizations. Depending on your industry, your location, and your business demographics, there are several grant options to apply for.

Federally funded small business grants

These resources can help you find and apply for federal government grant programs:

• SBA.gov contains information on federally funded grant and loan opportunities.
• Grants.gov has a searchable database for government grants. You can search according to funding type, type of business, and other categories.
• EDA.gov lists grants for economically depressed areas, issued by the Economic Development Administration.

These resources provide a range of grant options, along with step-by-step guidance on how to navigate the application process.

Community development small business grants

The Local Initiatives Support Corporation, a nonprofit community development institution, supports community development in many locations across the U.S.

The LISC’s small business relief grant program’s goal is to bridge the gap between government agencies and corporations with businesses and projects in need of capital.

It awards grants of $5,000 to $20,000 to small businesses in communities of 50,000 people or less who’ve been impacted by COVID-19, with an emphasis on underserved communities.

These small business grants may be used for:

• Operational costs (including rent and utilities)
• Payroll
• Vendor debt

Grants do not have to be repaid, although any taxes associated with the receipt or use of these funds are the recipient’s responsibility.

For more information, see the LISC’s web page on small business relief grants.

Other business relief options

Private companies like Facebook, Vistaprint and Verizon have also stepped up and offered relief grants to help small businesses survive. You can research options for private grants online, and reach out to your local chamber of commerce or SBDC to learn of any locally offered relief programs.

The Barstool Fund

Sponsored by Barstool Sports, this fund has an ongoing crowdfunding effort to raise funds for small businesses. There isn’t a set grant amount, although one recent business received $9,000. More information is available through its campaign webpage.

GoFundMe

Small businesses relief is also available through GoFundMe, the crowdfunding company. Businesses that raise $500 through their own GoFundMe campaign can receive a matching grant, provided it can verify the business has been negatively impacted by the coronavirus. Funds must be used to pay business expenses or care for employees.

Future options for small business relief

President Joe Biden’s proposed $1.9 trillion American Rescue Plan that’s currently making its way through Congress would include $15 billion in grants and $35 billion for small business financing programs, in addition to the current PPP loan program. This relief package will likely also include another round of stimulus checks.

These small business grants would be provided to the hardest hit small businesses to help them get back on their feet. They would not have to be paid back, although they may come with restrictions on how the money is used.

Additional grants and other forms of COVID-19 assistance could also be made available through state and local governments. Your local Small Business Development Center is a good source to learn about relief options in your community.

More advice on how to survive the coronavirus impact

Here are some other tips that may help you keep your business running:

• Avoid making rash decisions to save money, such as canceling your business insurance. It could turn out to be more costly in the long run.
• You may be able to negotiate with creditors to explore options such as delaying payments or refinancing loans. Helping you stay afloat could be more financially beneficial to them long-term.
• Consider alternative revenue streams such as offering delivery, expanding online sales, or selling gift cards for future purchases.
• Communicate with your employees and your customers about what’s being done to protect them and your bottom line.
• Keep yourself financially protected by maintaining your general liability insurance coverage and other small business insurance, for the same reason you bought them in the first place. One accident or injury could put you out of business, just when there’s light at the end of the coronavirus tunnel.

For more help and information, check out our FAQ: Answers to your coronavirus (COVID-19) business insurance coverage questions.

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