Businesses struggling to keep their doors open amid the ongoing public health crisis may not be aware of the financial resources available to them.
Here are Five Things Small Businesses May Not, But Should, Know About Available COVID-19 Relief:
1. Small businesses, which include businesses with up to 1,500 employees and a maximum of $38.5 million in average annual receipts, could get six months of principal, interest, and associated fees on covered Small Business Administration (SBA) loans paid – up to $9,000 per month, subject to the availability of funds. The SBA also now has agreed to waive the Guaranty Fee on 7(a) and 504 loans which savings could exceed $100,000 for small business borrowers.
2. The deadline to apply for COVID-19 Economic Injury Disaster Loans (EIDL) has been extended. These loans provide economic relief to small businesses and nonprofit organizations that are currently experiencing a temporary loss of revenue. Rates are 3.75% for businesses (fixed) and 2.75% for nonprofits (fixed) for 30 years with no pre-payment penalty or fees. The loans can be used for working capital and normal operating expenses. EIDL Loan Applications are now being accepted through December 31, 2021.
3. The SBA has increased the percentage of some loans they will guarantee from 75% to 90%. This higher guarantee decreases the risk to the bank when lending and could make SBA loans easier to obtain.
4. For the next round of Payroll Protection Program (PPP) loans, only employers with 300 employees or less will be eligible. Round one awarded loans to businesses with up to 500 employees and was criticized for not being tailored to small businesses. Businesses must also show a 30% quarter-over-quarter loss in gross receipts. Businesses have 24 weeks to spend their loan proceeds to remain eligible for loan forgiveness.
5. It is possible for businesses who have not yet gotten a PPP loan still to get two PPP loans. Timing and representations must be right. The SBA prefers that borrowers have applied for forgiveness before applying for a second loan, but borrowers still can get the first loan, and then make appropriate and timely representations that they have spent or will spend the money for approved purposes, and then could be eligible to apply for a second loan before the deadline later this spring.
Legal Assistance For Pittsburgh Businesses
Attorney Jacquelyn Core is an experienced member of The Lynch Law Group’s Corporate Practice – focused on representing small, medium, and large enterprises in complex commercial transactions, including mergers and acquisitions. Jacquelyn is available for consultations to structure, negotiate, and close deals in the COVID-19 environment and beyond as well as to assist with corporate restructurings.
Please call (724) 776-8000 or email her directly at firstname.lastname@example.org to schedule a time to discuss your business needs, to address legal questions about PPP loans or disaster relief, or if you need a personal introduction to an SBA Business Development Officer.Share This: