COVID-19: Financial Resources for Small Businesses

A number of new measures are designed to provide financial relief to small businesses and their employees affected by COVID-19. As a company committed to helping small businesses thrive, Travelers is sharing a list of financial programs designed to help small businesses. 

The CARES Act

The Coronavirus Aid, Relief, and Economic Security (CARES) Act contains $376 billion in relief for U.S. workers and small businesses with several new temporary programs to address the COVID-19 outbreak, including economic injury disaster loans and bridge loans.

Paycheck Protection Program

What is it?
The Paycheck Protection Program is a forgivable loan from the Small Business Administration (SBA) designed to create a direct incentive for small businesses to keep their employees on the payroll.

• Eligible businesses may obtain financing of up to $10 million as determined by average payroll amounts in the previous eight weeks preceding the application date.
• Money can be used for payroll, rent, mortgage interest, or utilities. At least 75% of the forgiven amount must have been used for payroll.
• Loan repayments are deferred for six months.
• If you keep your workforce intact, the amount that covers the eight-week payroll period will be forgiven.
• Neither the government nor lenders will charge small businesses any fees.
• The loan has a maturity of 2 years and an interest rate of 0.5%.

Who is Eligible?
According to the SBA, the following entities affected by Coronavirus (COVID-19) may be eligible:

• Sole proprietors, independent contractors, and self-employed persons.
• Small businesses that meet SBA’s size standards.
• Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans’ organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with:
  
  • 500 employees, or
  • That meets the SBA industry size standard if more than 500.
• Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location.

How to Apply
Applications will be accepted now through June 30, 2020. You can apply through any participating federally-insured depository institution, credit union or Farm Credit institution that is participating. Check with your local lender to see if it is participating in the program. Download the PPP borrower application form to see the information that a lender will request when you apply.

COVID-19 Payroll Tax Credits

What is it?
The U.S. Department of Labor has created the Families First Coronavirus Response Act (FFCRA), which provides up to 80 hours of paid sick leave for workers who experience symptoms of COVID-19 or require quarantine, and up to 10 weeks of family leave time to care for a child whose school or care provider has been temporarily closed. Small businesses with fewer than 50 employees can claim an exemption. Small businesses can receive tax credits that reimburse them for providing paid sick and family leave wages.

Who is Eligible?
The FFCRA provides small businesses with fewer than 500 employees refundable COVID-19-related tax credits. These credits reimburse them, dollar-for-dollar, for the cost of providing paid sick and family leave wages to their employees if their leave is related to COVID-19. Certain self-employed individuals are also eligible for similar tax credits.

How to participate
Small businesses with fewer than 500 employees can claim the cost of the leave against payroll tax obligations, depending on the specific circumstances. For more information, visit the IRS page on how to claim payroll tax credits.

Economic Injury Disaster Loans

What is it?
The Economic Injury Disaster Loan (EIDL) is an advance of up to $10,000 available to businesses that have had a temporary loss of revenue. Funds will be made available in three days from the date of application, and the $10,000 amount is not required to be repaid.

Who is Eligible?
Small business owners with less than 500 employees in all U.S. states and territories are eligible to apply. This includes sole proprietorships, independent contractors, and people who are self-employed, as well as private non-profit organizations or 501(c)(19) veterans’ organizations affected by the pandemic. Businesses larger than 500 employees in certain industries may also qualify if they meet the SBA’s size standards for those industries.

How to Apply
Small business owners can apply for the loan advance on the SBA’s website.

SBA Bridge Loans

What is it?
The SBA Bridge Loan Program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly.

Who is eligible?
Small businesses who currently have a loan with an SBA Express Lender who have an urgent need for cash can apply for a loan while they wait for a direct SBA Economic Injury Disaster Loan. The bridge loan will be repaid in full or in part by proceeds from the EIDL loan.

How to apply
Contact your SBA Express Lender to discuss the bridge loan.

Extension of IRS Filing Deadline

The Internal Revenue Service (IRS) has pushed back the tax filing deadline to July 15, 2020. This extension applies to both individuals and applicable businesses. Taxpayers who are owed refunds are encouraged to file sooner to expedite payment from the IRS. No further action is required, and entities wishing to extend filing further can do so by completing Form 4868.

Stay Informed

During the COVID-19 outbreak, new developments likely dominate your newsfeed. For more than 160 years, Travelers has been committed to helping small businesses grow and prosper, and that commitment endures as we face these challenging times together. Stay well. Stay safe. And we’ll do our best to keep you informed. 

Note: This content is for informational purposes only and does not constitute legal advice.