While COVID-19 continues to spread, the Federal Government has taken a number of steps and adopted many new programs to help businesses meet their needs in the face of today’s economic challenges.
Paycheck Protection Program The Paycheck Protection Program may be particularly helpful for your business as it authorizes up to $349 billion in forgivable loans to small businesses to help them pay their employees during the crisis. As one might imagine, the regulations governing the forgivability provisions, while creating great opportunity also have very specific requirements for employers in order to qualify. For more information about the Paycheck Protection Program and opportunities for loan forgiveness, please visit this link on the United States Treasury website. Applications for this loan are made through SBA approved lenders and lenders recently began accepting applications. Banks are prioritizing applications from their business clients so it is best to contact your existing banking relationship first.
Businesses should also consider the SBA’s Economic Injury Disaster Loan Program (EIDL). To apply for the EIDL, please visit this link on the SBA’s website.
These loans need to be repaid, but we note that eligible EIDL applicants can receive a $10,000 emergency grant within three days of application (through Dec. 31). There is no obligation to repay the emergency grant. To receive the $10,000 grant, it is not necessary to have an approved loan through the EIDL program.
NOTE: The Paycheck Protection Program prohibits borrowers from taking out two loans for the same purpose. If your loan from the EIDL program is used for payroll costs, your Paycheck Protection Program loan must be used to refinance the loan you received through the EIDL program. In addition, the $10,000 EIDL grant will be rolled into the Paycheck Protection Program loan (and subtracted from the forgiveness amount because it does not have to be repaid).
Our office is available to provide you with assistance or counsel throughout the loan application and implementation process. We are happy to help you determine loan eligibility and confirm loan terms, review loan applications and loan documents, discuss tax implications, discuss all employee related matters, as well leasing and vendor relationships as they relate to the loan forgiveness provisions. We can also provide guidance if you are considering restructuring your organization – something many businesses are considering at this time.
In addition, there are many other new programs and initiatives that may be helpful for your business including:
- The SBA Debt Relief Program, which has allocated funds to cover payments of principal and interest on certain new and existing SBA loans
- The SBA Express Bridge Loan Program under which small businesses that have an existing relationship with certain SBA lenders can receive a bridge loan of up to $25,000 to offset temporary losses of revenue
- Provisions in the tax code to allow increased use of certain business losses
- Payroll tax credits for retaining employees
- Payroll tax credits and refunds for covering the cost of coronavirus paid leave
- Payroll and income tax deferrals
Each of these programs has its pros and cons and limitations, which our business, employment and tax attorneys are available to discuss with you. Please feel free to reach out to our attorneys for more information: