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FAQ for Small Businesses

Am I eligible to apply for a low-interest loan due to Coronavirus?

Small business owners in all U.S. States and territories are currently eligible to apply for a low-interest loan due to Coronavirus. Click here to apply.

What can a U.S. Small Business Administration (SBA) Economic Injury Disaster Loan be used for in my small business?

SBA's Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster's impact. The interest rate is 3.75% for small businesses and 2.75% for non-profits.

What if my small business can't afford to pay sick leave?

The Phase II coronavirus bill includes a refundable payroll tax credit to reimburse - dollar-for-dollar - local businesses for paid sick leave and family and medical leave wages paid to employees that are affected by the coronavirus. Click here for an explanation of who is eligible and for what amounts.

What if my business can't sustain waiting for a tax credit?

The Phase II coronavirus bill provides significant relief to businesses that otherwise may not be able to afford the employee costs associated with coronavirus-related paid leave. Treasury has broad regulatory authority to advance funds to employers to protect businesses concerned about cash flow. The Treasury has stated that employers will be able to use cash deposited with the IRS to pay sick leave wages. Additionally, for businesses that would not have sufficient taxes to draw from, Treasury will use its regulatory authority to make advances to small businesses to cover such costs.

Why does the legislation of the Phase II coronavirus bill exempt businesses with more than 500 employees from mandated paid leave while imposing the requirement on small- and medium-sized job creators?

The benefits under the bill are not an expense for the business, rather it operates as a benefit to both the worker and the employer. The legislation will ensure that every dollar of leave that an employer is required to pay is reimbursed by the federal government. It will allow workers to care for themselves and loved ones impacted by the coronavirus. Additionally, the credit will help businesses to stay up and running.

Nearly 90% of businesses with more than 500 employees offer paid sick leave to their full-time workers. To facilitate more universal coverage of paid sick leave, this bill provides temporary federal coverage for paid sick and family leave to all employers with fewer than 500 employees.

Does the Phase II coronavirus bill mandate an unaffordable extension of FMLA on my small business?

The bill permits the Secretary of Labor to exempt businesses with fewer than 50 employees from the longer-term mandate where it creates significant hardship.

What is the effective date of the Families First Coronavirus Response Act (FFCRA), which includes the Emergency Paid Sick Leave Act and the Emergency Family and Medical Leave Expansion Act?

The FFCRA's paid leave provisions are effective on April 1, 2020, and apply to leave taken between April 1, 2020, and December 31, 2020

How do I know if I am eligible for sick leave?

In the Phase II bill, it requires employers to provide notice of eligibility to employees. The Department of Labor was required to create a model notification within 7 days after enactment of the bill. That notification model can be found here.

Are non-profits, chambers, physician practices, eligible for 7(a) loans?

501(c), (d), (e) private non-profits are eligible. Physician practices are eligible, no matter how they are structured.

Can small businesses hire back previously fired employees and still have the loans forgiven? If so, what is the hire-back date?

Yes. There is flexibility in the program to allow businesses to hire new, or returning employees, by June 30, 2020, and still qualify under the headcount requirements.

How quickly will businesses be able to access loans?

The SBA is currently working on capacity issues, including onboarding new lenders. The SBA is assuring Congress that they will be ready to stand up all the requirements in the Phase III bill as quickly as possible.

What does the bill do to provide relief for rural communities and farmers?

The bill includes a number of small business provisions designed to help farmers stay in business and take care of their employees during this difficult time. These include provisions that allow farmers to work with their trusted farm credit institutions for the purposes of securing payroll tax loans, along with 1-year deferrals, 100% guarantees, and low rates.

The bill provides $14 billion for the Commodity Credit Corporation (CCC), the funding mechanism for all major USDA programs. It also appropriates an additional $9.5 billion to specifically respond to losses due to the coronavirus.

Additional funding is provided for USDA agencies that are on the front lines of responding to coronavirus, including the Food Safety Inspection Service (FSIS), the Animal and Plant Health Inspection Service (APHIS), and the Farm Service Agency (FSA).

The bill also includes $100 million to provide financing for rural broadband through the ReConnect program, and $25 million for the Distance Learning and Telemedicine program to provide grants for equipment and connectivity improvements.

How will the employee retention credit work?

The Employee Retention Credit provides a refundable payroll tax credit equal to 50 percent of up to $10,000 in wages per employee (including health benefits) paid by certain employers during the coronavirus crisis.

The credit is available to employers:

• whose operations were fully or partially shut down by government order limiting commerce, travel, or group meetings due to coronavirus, or

• whose quarterly receipts are less than 50% for the same quarter in the prior year.

Wages paid to employees during which they are furloughed or otherwise not working (due to reduced hours) as a result of their employer's closure or economic hardship are eligible for the credit.

However, for employers with 100 or fewer employees, all employee wages qualify for the credit, regardless of whether they are furloughed or face reduced hours.

To prevent double dipping, employers that receive Small Business interruption loans are not eligible for the credit. Additionally, wages that qualify for the required paid leave credit are not eligible for the credit.

The credit is for wages paid by eligible employers from March 13, 2020 through December 31, 2020.

I already took out an EIDL for payroll purposes. Can I still participate in the Paycheck Protection Program?

A borrower that has taken out an EIDL for payroll costs or otherwise between January 31, 2020 and the date Paycheck Protection Loans are first made available may be able to refinance its EIDL through the Paycheck Protection Program.

What is the maximum loan size for the Paycheck Protection Program?

The maximum loan size is equivalent to 250 percent of the employer's average monthly payroll costs (roughly 10 weeks of payroll expenses) or $10 million, whichever is less. Payroll costs are defined broadly to include wages, salaries, retirement contributions, healthcare benefits, covered leave, and other expenses. The loan should have an interest rate no higher than 4% and lenders are expected to defer fees, principal and interest for no less than six months and no more than one year.

Can my Paycheck Protection Program loans be forgiven?

Yes, small businesses that take out these loans can get some or all of their loans forgiven, but not more than the loan's principal amount. To do so, employers must continue paying employees at normal levels during the 8 weeks following the origination of the loan, then the amount they spent on payroll costs (excluding costs for any compensation above $100k annually), mortgage interest, rent payments, and utility payments can be combined and that portion of the loan will be forgiven. Generally, a borrower will need to have been in operation before February 15, 2020 and have no more than 500 employees.

Are businesses that employ more than 500 employees across multiple locations eligible for the Paycheck Protection Program at each individual location?

A business is generally eligible for the Paycheck Protection Program if it is a for-profit business, 501c3, or 501c19 (veterans organization) nonprofit with fewer than 500 employees. There are a few exceptions. Businesses in the accommodation and food service industry (assigned a North American Industry Classification System code beginning with 72) with more than one location, a business could also be eligible at the store and location level if the store employs fewer than 500 workers. In other words, each store location could be eligible.

What will I need to provide for my Paycheck Protection Program loan?

An eligible business will need to submit an application to the lender including documentation verifying the number of full-time equivalent employees on payroll and pay rates for the applicable periods, including payroll tax filings; and state income, payroll, and unemployment insurance filings; and documentation verifying payments on mortgage obligations, lease obligations and utilities, including cancelled checks, payment receipts, transcripts of account, or other documents. The SBA must issue regulations within 15 days of enactment of the CARES Act, making it possible for lenders to take loan applications as soon as mid-April. Lenders will be "held harmless" for forgiveness if they have that documentation and any loan amounts remaining after this forgiveness is applied will be carried forward, with a maximum maturity of 10 years and a maximum interest rate of 4% with an option to defer payments of interest and principal no more than 1 year.

To receive a loan, do I go through the SBA or my bank/credit union?

There are two routes for small businesses:

1. SBA: Available now. Apply for the Economic Injury Disaster Loan (EIDL) directly atwww.sba.gov/disaster . This now has a $10K advance that is forgivable.

  • Low interest, long term Economic Injury Disaster Loans for up to $2 million: The first payment is deferred for 12 months. The application has been simplified and can be completed 100% online through our improved web portal atwww.sba.gov/disaster.

  • Economic Injury Disaster LoanAdvance for up to $10,000: The form to apply is part of the economic injury disaster loan application. If approved, these funds can be used for payroll and other operating expenses and will be forgiven.

2. BANK: Available soon. Apply directly through an SBA Lender for a Paycheck Protection Program (PPP). List of lenders located on page 29 inSC RESOURCE GUIDE. The lenders are supposed to get detailed guidance to prepare to process these loans by the end of the week. Many more banks are asking to become SBA approved lenders so there will be more added.

Later this week the SBA and Treasury Department will launch the new Paycheck Protection Program to help keep employees on payroll and small businesses operating. Additional information about this program will be shared in the coming days.

What SBA emergency capital programs are available today?

Two SBA emergency capital programs are available today and more will be coming soon:

  1. Low interest, long term Economic Injury Disaster Loans for up to $2 million: The first payment is deferred for 12 months. The application has been simplified and can be completed 100% online through our improved web portal atwww.sba.gov/disaster.

  2. Economic Injury Disaster LoanAdvance for up to $10,000: The form to apply is part of the economic injury disaster loan application. If approved, these funds can be used for payroll and other operating expenses and will be forgiven.

Later this week the SBA and Treasury Department will launch the new Paycheck Protection Program to help keep employees on payroll and small businesses operating. Additional information about this program will be shared in the coming days.

The Paycheck Protection Program will provide capital to keep employees on payroll and small businesses operating. More details on this will be available in the coming days; Up to 6 months of debt relief on SBA working capital loans (also known as 7(a) loans).

To get the most up-to-date information as things develop, visitwww.sba.gov/disaster and subscribe to the SBA e-newsletter viawww.sba.gov/updates. You can find a full listing of the SBA's traditional loan programs atwww.sba.gov and you can find a list of SBA Lenders in theSC RESOURCE GUIDE