If you are a small business owner it is likely that you are feeling the effects of the current coronavirus pandemic. You may be wondering if you can make payroll, or continue to pay rent. A number of state and federal programs have been implemented to help small businesses affected by COVID-19 address these problems.
HELP FOR SMALL BUSINESSES
Florida Small Business Emergency Bridge Loan Program
The Florida Small Business Emergency Bridge Loan Program provides short-term, interest-free loans to bridge the gap between the time the economic impact occurred and when a business secures other financial resources, including payment of insurance claims or longer-term Small Business Administration (SBA) loans. The program is managed by the Florida Department of Economic Opportunity (DEO). To be eligible, a business must have been established prior to March 9, 2020, and demonstrate economic impacts as a result of COVID-19. The application period for the bridge loan program opened on March 17, 2020 and runs through May 8, 2020.
Loans will only be made to an individual (or individuals) who own, individually or collectively, at least 51% of an Eligible Business. The Eligible Business owners must serve as guarantor for the loan and only one loan may be made per Eligible Business.
Loan amounts for businesses with less than two employees is $25,000 per business. Businesses with two to 100 employees may borrow $50,000 per business. Loans of up to $100,000 may be made in special cases. Loans are interest free, and will be due one year from the date of the promissory note. The caveat with these loans is that they become fully due and payable at the end of one year and then bear interest at a rate of 12% per annum. The State reserves the right to turn these loans over to collection at the end of the year.
For questions regarding the Emergency Bridge Loan Program, contact the Florida Small Business Development Center Network at 866-737-7232 or email Disaster@FloridaSBDC.org. The application form and additional details can be found at FloridaDisasterLoan.org. UPDATE: AS OF APRIL 13th, THE INITIAL ALLOCATION HAS BEEN EXHAUSTED. It is unknown if more funding will become available.
SBA Federal Aid Programs
The federal government has recently enacted legislation to help small businesses weather the COVID-19 crisis, including the CARES (Coronavirus Aid, Relief, and Economic Security) Act passed on March 25, which provides $349 billion in Small Business Administration (SBA) loans. Two programs that are designed to aid small business owners are the Paycheck Protection Program and Economic Disaster Emergency Loans.
Those that are eligible for aid include small businesses and nonprofit organizations (less than 500 employees). Some larger companies in particular industries may also be eligible. (For more information visit: www.sba.gov/document/support–table-size-standards).
Paycheck Protection Program
This forgivable loan program offers loans of up to $10 million to cover eight weeks of payroll plus expenses such as rent and utilities. The goal is to help companies retain their employees or rehire employees that were laid off.
Businesses with fewer than 500 employees (with some exceptions) are eligible, including sole proprietors and independent contractors. If there are independent contractor/1099 workers on the payroll, they are not eligible to be counted as part of the wages for calculation of loan amount or forgiveness.
Companies can borrow up to two months of their average monthly payroll costs for the past year, plus an additional 25 percent, up to $10 million. Included in payroll costs are things such as salaries, wages, tips, commissions, paid leave benefits, employer-paid health insurance premiums, and state and local payroll taxes.
Many of the usual SBA loan requirements have been waived and collateral is not required. Both full and partial forgiveness is available. If a company uses the money to retain workers or hire back positions it had to cut, a portion of the loan (possibly all) will be forgiven. Borrowers will have two years to pay off the balance of their loan, at a 1 percent interest rate. No payments are due for the first six months after the business receives the loan.
The application deadline is June 30, 2020. Applications are made through a bank or other lender. The application may be found at: www.sba.gov/document/sba-form–paycheck-protection-program-borrower-application-form. On the SBA website is a search tool (www.sba.gov/paycheckprotection/find) that provides help finding a bank/lender.
For more information visit www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program-ppp.
Economic Injury Disaster Loans
This program offers low-interest loans of up to $2 million for businesses that have suffered losses from a disaster, to cover most business expenses. The loans are made directly by the SBA, and you can apply on its website, www.sba.gov.
Businesses can request up to $10,000 of a disaster loan as a grant. The balance of the loan can be repaid on a term of up to 30 years at a 3.75% interest rate (2.75% for nonprofits). No payment will be due for the first year.
On loans of less than $200,000, personal guarantees are not required. Business assets can be used to secure loans of up to $500,000. Larger loans will require real estate as collateral.
The SBA will determine how much a business can borrow by using a formula that approximates six months of the business’ operating expenses. Portions of the program, like the $10,000 grants, end on Dec. 30, 2020.
For more information, visit www.sba.gov/funding-programs/loans/coronavirus-relief-options. For help with applying for an Economic Injury Disaster Loan, call 800-659-2955 or email firstname.lastname@example.org.
Small Business Debt Relief Program
This program provides immediate relief to any business that has a currently outstanding SBA 7(a), 504 or microloan. The SBA will cover all loan payments on these SBA loans for six months.
BENEFITS FOR INDIVIDUALS: THE CARES ACT
The CARES Act also provides several benefits to individuals. Here are the highlights of some of the most important, but possibly least understood options.
Direct Cash Payments: Most individuals earning less than $75,000 will get a one-time cash payment of $1,200 for an individual, $2,400 for a married couple filing jointly and $500 for each child. They are based on either your 2018 or 2019 tax filings. If you receive Social Security benefits and don’t file taxes, you should still get a payment. The recovery rebate is reduced by $5 for every $100 of adjusted gross income (AGI) above $75,000 for individuals, $112,500 for heads of households, and $150,000 for married joint filers. Consequently, the rebate is not payable to individuals (with no eligible children) with AGI above $99,000 or married joint filers (with no eligible children) with AGI above $198,000. A married couple with two eligible children is ineligible for the rebate with AGI above $218,000.
Protection from Eviction/Foreclosure: The CARES Act codifies protections for some homeowners against foreclosure and some renters against eviction. If you are experiencing financial hardship due to the coronavirus, you will be granted forbearance on your federally backed mortgage loan for up to 60 days, with the potential for up to four 30-day extensions. Foreclosures may not begin for 60 days from March 18, 2020. No fees, penalties, or added interest may be charged on delayed payments.
If you are a landlord with a federally backed mortgage on a multifamily home, you have similar protection that allows a 30-day forbearance on payments and up to two 30-day extensions.
If you are a renter in a multifamily home with a federally backed mortgage loan, you may not be evicted solely for failure to pay rent for a 6-month period. You also may not be charged fees or penalties for not paying rent.
The major cautions are that to be eligible for these protections, the mortgage must be federally backed whether you are a renter or owner. This can be determined by going online to www.consumerfinance.gov/ask-cfpb/how-can-i-tell-who-owns-my-mortgage-en-214/.
Other mortgage lenders and landlords may also provide relief at this time but are not mandated to do so. Everyone seeking forbearance or rent relief should contact their lender or landlord immediately. It will not happen automatically.
Extra Unemployment Compensation: The CARES act expanded eligibility for unemployment assistance, increased the benefit amount and allowed for a longer collection period. It provides an extra benefit of $600/week on top of the base benefit for four months. It also adds an extra 13 weeks of basic unemployment insurance coverage. Also, there is the Temporary Pandemic Unemployment Assistance program that allows people who are self-employed, freelancers, independent contractors and gig workers to collect unemployment compensation.
FLORIDA FORECLOSURE AND EVICTION SUSPENSIONS
Florida Governor DeSantis suspended and tolled all foreclosure actions and all residential evictions for non-payment of rent for a period of 45 days, beginning on April 2, 2020.