The vast majority of small business owners will be negatively affected by the coronavirus crisis. A recent Next Insurance survey revealed that 89% expect losses and 50% say they could lay off employees or close.
The situation is critical, but there are a variety of resources for small business financial help in the wake of COVID-19, including funds from the historic $2 trillion stimulus package and programs organized by local governments.
In this article, we will share options for COVID-19 small business financial help, including:
- The small business stimulus package and how to access funds
- SBA disaster loans and requirements
- Federal income tax help for businesses
- State and local government financial help for small businesses
We’ll continue to make updates to this article as additional resources become available. Visit the Next Insurance resources and FAQs page for additional information.
Small business stimulus package
The federal government introduced a historic $2 trillion stimulus package in March to provide relief for the catastrophic financial impacts of COVID-19 on the U.S. economy.
Also known as the CARE Act (you can read the entire 880-page PDF here), the package provides a one-time payment of up to $1,200 for individuals making less than $75,000 annually.
The stimulus plan also includes billions of dollars in funding to support small businesses during the crisis.
$350 billion in forgivable small business loans
After an initial $349 billion in Payment Protection Program loans was exhausted in less than two weeks, Congress approved another $310 billion for the program that became available for small businesses on April 27.
The PPP loans of up to $10 million are available to businesses with less than 500 employees that have been in business since Feb. 15. Sole proprietors and independent contractors are also eligible.
The amount of each loan is determined based on eight weeks of prior average payroll plus an additional 25% of that amount, according to the SBA.
Loan payments can be deferred up to a year, but interest (no higher than 4% for each loan) will continue to accrue.
Here’s the catch: Up to 100% of the loans are forgivable, but small business owners must meet specific requirements, including maintaining payroll for existing employees who earn less than $100,000. This requirement was included in the stimulus package to keep the U.S. workforce employed and slow unemployment rate growth.
How to apply for a stimulus loan under the coronavirus bill
The small business loans from the stimulus package are expected to be delivered to banks and credit unions that are approved SBA lenders in early April. Loan officers at those organizations will work with you to secure a loan approval.
Call the bank or credit union where you have your business account to confirm it is approved by the SBA or review other options on the SBA loans website.
Note, many of these institutions are experiencing high call volumes so anticipate a long wait to speak to a loan officer.
Learn more about the Paycheck Protection Program.
SBA disaster loans
The Small Business Administration also offers Economic Injury Disaster Loans of up to $2 million for small businesses that experience a temporary loss of revenue.
Businesses affected by COVID-19 that complete the application are eligible for a $10,000 loan advance that could be delivered within three days of the application.
Requirements for SBA disaster loans
The SBA has several standard requirements for disaster loans, including:
- Applications must have a credit history that meets the agency’s standards
- Applicants must show the ability to repay loans
- Collateral is required for loans over $5,000
It is unclear if any of these requirements will be adjusted due to the current crisis. An application for a loan can be completed online.
Federal income tax help
The Internal Revenue Service is extending its deadline for filing federal income tax returns from April 15 to July 15. This change applies to both individuals and small businesses. An extension is also available for those who are unable to meet the new July deadline.
It’s important to note that this change only applies to federal income and not state tax filings or other federal taxes. Check with your state tax agency to make sure you don’t miss any deadlines.
State and local government financial resources for COVID-19
In addition to the billions of dollars committed to small businesses at the federal level, state and local agencies are taking steps to help small businesses. We’ll continue to update the list of available resources in this section as we learn more.
U.S. cities offering financial aid to small businesses
Chicago small business resiliency fund
The City of Chicago is partnering with community and private-sector organizations for a $100 million fund to help small businesses in immediate need of cash flow.
Los Angeles microloan program
Los Angeles is offering loans from $5,000 to $20,000 to assist with losses associated with COVID-19. Interest rates range from 0% for up to 18 months to 2% for up to five years.
New Orleans gig economy fund
Gig workers in New Orleans, including hard-hit local musicians and ride-share drivers, are eligible for $500 to $1,000. Applicants must be residents of Orleans parish and have proof of gig-related employment.
New York City employee retention program
New York City businesses with less than five employees that can show a decrease in revenue of at least 25% are eligible for a grant that will pay up to 40% of their payroll for two months. Losses must be associated with COVID-19 and grant limits are $27,000.
San Francisco coronavirus small business fund
Small business owners in San Francisco that are negatively affected by the coronavirus are eligible for up to $10,000 to pay for employee salaries and rent.
States offering COVID-19 financial help to small businesses
Arkansas Quick Action Loan Program [PDF]
Arkansas has committed $7 million in funding for loans to help small businesses recover from the crisis. The loans can be used for a variety of business functions.
California disaster loan program
California’s disaster relief loan guarantee program is eligible for businesses and nonprofits with less than 750 employees. Loans are managed by participating lenders and can be used to help keep businesses open or address the economic impact of the crisis.
Delaware hospitality industry emergency loans
Delaware is offering loans up to $10,000 to assist restaurants, bars, and other hospitality businesses that have been affected by the crisis. Loans can be used to cover bills, rent, and other business expenses.
Florida small business emergency loans
The Florida Small Business Emergency Bridge Loan program provides up to $100,000 in short-term, interest-free loans to eligible small businesses.
Minnesota, Montana, North Dakota and Wisconsin relief fund
The Otto Bremer Trust is providing up to $50 million for nonprofits and other community organizations with emergency funding requests. Applicants will be approved on a case-by-case basis.
Michigan business resources for COVID-19
Michigan’s Small Business Relief Program will provide up to $20 million in loans and grants for small businesses.
How Next Insurance supports small businesses
Next Insurance is 100% committed to supporting small business owners through this difficult time.
As you respond to the coronavirus crisis, we are working hard to provide resources and answers to all of your questions.
Learn more about the services Next Insurance provides.