Recently passed federal legislation will not only will send checks to individuals, but it also contains provisions for small businesses that experience financial hardships due to the COVID-129 pandemic.
The Coronavirus Aid, Relief and Economic Security Act, which was passed by Congress and signed by President Donald Trump last week, included assistance for businesses.
Jess Clifford, from the Tooele Valley Small Business Development Center, reviewed some of those provisions in an online video conference with the Tooele County Chamber of Commerce on Tuesday afternoon.
One of the act’s provisions is the allocation of $350 billion for the Small Business Administration Payroll Protection Plan.
The PPP is designed to help small businesses with 500 employees or less.
Through PPP, businesses may apply for loans up to 2.5 times their average monthly payroll, up to $10 million. The loan may be used for payroll, rent, mortgage interest, utilities, and interest on pre-existing debt, according to Clifford.
Any money that the business spends within the first eight weeks of receiving the loan for those expenses will be forgiven, Clifford said.
If the business reduces its number of employees, then the SBA will reduce the amount of forgiveness by the same percentage. If the business reduces the salary it pays to an employee earning less than $100,000 by more than 25%, the SBA will reduce the amount of forgiveness on a dollar-for-dollar basis. Employers that restore their employment numbers and salaries by June 30, 2020 would experience no reduction in forgiveness.
The Economic Injury Disaster Loan is a direct loan that can be applied for with the Small Business Administration. The EIDL has a 3.75% interest rate for for-profit businesses and a 2.75% interest rate for non-profit organizations. The payback period is 30 years, according to Clifford.
Small businesses who have applied for an EIDL may request a rapid advance, to be issued within three days of application, of up to $10,000 to cover paid sick leave, payroll, increased supply chain costs, rent/mortgage payments, and other obligations that cannot be met due to revenue loss, Clifford said.
Other provisions of the CARES Act included payments on principal, interest, and fees for SBA-issued loans undertaken before enactment of the bill will be covered by the SBA for six months and the maximum amount for SBA Express loans— approved within 36 hours of application — was increased from $350,000 to $1 million.
Along with federal business assistance, the Governor’s Office of Economic Development announced the Utah Leads Together Small Business Bridge Loan program for small businesses with 50 or fewer employees.
Loan amounts range from $5,000 to $20,000 with 0% interest for up to a 60-month period. These loans are for businesses, not nonprofits, and cannot exceed three months of demonstrated operating expense. Payments are deferred for 12 months, according to Val Hale, GOED executive director.
Clifford advised businesses to apply for all the assistance possible.
“Apply for all of them,” he said. “Make your choice when they come to you, that way all the options will be available for you.”
Additional information on business assistance during the COVID-19 outbreak is available from the Tooele Valley Small Business Development Center’s website, tooelebusiness.org