It is hard to know what the total impact of the pandemic will be on our economy here in Wisconsin, but there is some positive news that can help all of us. The recently-passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides a variety of assistance programs to businesses and homeowners. We have outlined the programs below that we think can provide the quickest and best help for you, your business and your employees.
Coronavirus Aid, Relief, and Economic Security (CARES) Act
The CARES Act allocated $350 billion to help small businesses keep workers employed amid the pandemic and economic downturn. Known as the Paycheck Protection Program, the initiative provides 100% federally guaranteed loans to small businesses. Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. Another important aspect of the CARES Act for small businesses is that it expands eligibility for the Small Business Association’s (SBA) Economic Injury Disaster Loans (EIDLs)…see more information below.
Guidance is still coming out to the banks on application procedures; however, your local financial institution is the place to start. You can find detailed info here.
This explanatory infographic answers a lot of questions. Download it here.
SBA Economic Injury Disaster Loan (EIDL)
In response to the COVID-19 pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan (EIDL). The SBA’s EIDL program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
Before entering the final loan application information, you will be asked if you would like to be considered for a $10,000 advance on your loan. This is the $10,000 grant that is mentioned in the CARES Act. Businesses who request this $10,000 advance on their loan (which is being called a grant) and are approved are expected to receive it within three days. This $10,000 advance does not need to be paid back — though the rest of your disaster assistance loan will need to be paid back.
Can a business get BOTH an EIDL and a Paycheck Protection Program loan?
Yes, small businesses can get both an EIDL and a Paycheck Protection Program loan if they don’t pay for the same expenses. However, be sure to check with your financial advisor or lender before taking both types of loans if you are not sure of the specifics.
Wisconsin Economic Development Corporation (WEDC) Small Business 20/20 Grants
The Small Business 20/20 Program provides grant funds to approved community development financial institutions (CDFIs). Approved CDFIs will award grants of up to $20,000 to their existing loan clients to assist with cash-flow challenges resulting from COVID-19. Businesses that are not currently CDFI clients are not eligible to access these funds, but WEDC will work to expand access to funding through other programs as more resources become available. Check out the FAQs here.
Families First Coronavirus Response Act (FFCRA)
The recently passed Families First Coronavirus Response Act makes substantial changes to sick and FMLA leave for businesses and employees in 2020. This new law went into effect on April 1, 2020, and it will remain in effect until December 31, 2020. While the full legislative package includes many provisions, only four aspects of the law apply chiefly to businesses. These broad changes include requiring some employers to provide paid sick leave, paid family and medical leave along with tax credits for the paid leave, and expansion of unemployment insurance.
SBA 504 and 7(a) Loan Program Payment Deferment
The SBA, in conjunction with your bank and local Certified Development Company (CDC), have authorized loan deferrals for up to a 6-month period on current SBA 504 and 7(a) loans extended to borrowers. Deferral periods are as follows:
- 7(a) loans: 6-month deferral for loans not sold on the secondary market. For loans sold on
the secondary market a 90-deferral period is available.
504 loans: limited to the lesser of a 6-month deferral or 20% of the original amount.
- Borrowers interested in applying for the deferments should contact their loan servicing bank for 7(a) deferment and contact both their local bank and CDC (if applicable) who administers their 504 loans.
SBA Express Bridge Loans
The Express Bridge Loan Pilot Program allows small businesses that currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide support to small businesses while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on Economic Injury Disaster Loan (EIDL), they may qualify for an SBA Express Disaster Bridge Loan. You can find lender details here.
Home Mortgage Relief
Thanks to recent moves made by many of the largest banks, both brick-and-mortar and online banks, and some local banks, many folks can access some type of mortgage payment relief on their personal residence. The programs are wide-ranging and include payment deferrals from 30 -120 days, interest only payments, home equity line of credit (HELOC) flexibility, and others, all with no adverse impact on credit. The offerings differ from institution-to-institution so reach out to your primary mortgage servicing bank for details on their specific programs.
Please share with us your thoughts and any additional details or programs you may know about, so we can pass those along to our readers. Together, we will get through this.