Entrepreneur Insight

A Shot in the Arm: COVID-19 Small Business Resources Available Now

The latest programs and grants that have been announced to help small businesses affected by COVID-19

To help U.S. entrepreneurs combat the economic impact of Covid-19, we’ve included a list of the latest resources and programs that have been announced to aid small businesses. Read more to see what options are available to your business.

SBA Paycheck Protection Program

As of Thursday, April 16, the SBA is no longer accepting applications for its Paycheck Protection Program. However, the Senate is working on passing a bill that would include additional emergency funding. Senate Republicans are pushing for an additional $250 billion in funding for the PPP, and Democrats want to include another $250 billion in funding for hospitals, states and food assistance.

The Small Business Administration’s $349 billion Paycheck Protection Program (PPP) was designed as an incentive for businesses to keep people employed. All businesses with fewer than 500 employees can apply, including sole proprietorships, self-employed people, independent contractors, 501(c)(19) veterans organizations and private nonprofits. However, some businesses with more than 500 employees can still apply as long as they meet the SBA’s size standards for those industries.

In order for loans to be forgiven, at least 75 percent of it must be used to cover payroll costs, which means that employers must maintain salary levels by either keeping employees or rehiring them. The loan matures in 2 years and has a 1 percent interest rate. Payments will be deferred for 6 months, and there is no need for collateral or personal guarantees. There are also no fees.

Small businesses and sole proprietorships can apply for PPP loans starting April 3, and independent contractors and self-employed individuals can apply starting April 10. You can apply through any existing SBA 7(a) lender, federally insured depository institution, federally insured credit union or participating Farm Credit System institution.

Here is a list of banks that are accepting applications for the program. Click here to download the Paycheck Protection Program application.

Main Street Lending Program

The Federal Reserve unveiled plans for its $600 billion Main Street Lending Program to support small and medium-sized businesses that were in “good financial standing” prior to the COVID-19 outbreak. As part of its larger $2.3 trillion plan to provide loans to support the economy, the Main Street program will consist of two lending facilities: the Main Street New Loan Facility (MSNLF), which are newly originated loans, and the Main Street Expanded Loan Facility (MSELF), which allow businesses to expand existing loans. Unlike the PPP, loans made under this program cannot be forgiven.

Eligible businesses have up to 10,000 employees. Businesses that have received a PPP loan can also apply for a Main Street loan, although they cannot use a Main Street loan to pay off other loans. The minimum loan size for both MSNLF and MSELF is $1 million. The maximum loan size for MSNLF is $25 million and for MSELF is $150 million. The loans will have a 4-year maturity and an interest rate between 2.5-4 percent. Businesses can defer payments for up to 1 year.

The Fed is still working on creating the program’s infrastructure. Businesses will be able to apply through U.S. insured depository institutions, bank holding companies, and savings and loan companies. The Fed will release more details once the Main Street Lending Program has been finalized.

SBA Economic Injury Disaster Loan and loan advance

The Economic Injury Disaster Loan (EIDL) is an expansion of the SBA’s existing disaster loan program. Businesses that apply for EIDL can receive a loan advance of $10,000 that will be available within days of a successful application; the advance does not need to be repaid.

The business eligibility requirements are the same as for the Paycheck Protection Program. For EIDL, businesses can borrow up to $2 million, with an interest rate of 3.75 percent for small businesses and 2.75 percent for private nonprofits. The loan terms can be for up to 30 years, and loans over $25,000 will require collateral, which can be real estate.

Click here to apply for EIDL.

SBA Express Bridge Loan Pilot Program

The SBA has also expanded its Express Bridge Loan (EBL) program to cover small businesses that have suffered financial losses due to the coronavirus outbreak. The EBL program allows lenders to expedite funds to businesses in declared disaster zones but are meant only as interim financing. Borrowers can receive up to $25,000, with a loan maturity of up to 7 years.

Eligible businesses must have been in operation on March 13, 2020, the date the COVID-19 emergency was declared, and must meet the SBA’s 7(a) requirements. SBA 7(a) requires that businesses operate for profit, do business in the United States or its territories, have reasonable owner equity, and have used other financial resources before seeking a 7(a) loan.

Typically, EBL loans can only be made up to 6 months after a disaster has been declared, but the COVID-19 expansion allows for Express Bridge loans to be made through March 13, 2021.

Los Angeles City Small Business Emergency Microloan Program

Los Angeles Mayor Eric Garcetti revealed that the city is allocating $11 million for the Los Angeles City Small Business Emergency Microloan Program. The loans, which range from $5,000-20,000, are meant to provide working capital for small businesses during the coronavirus crunch. The loans are expected to serve between 550-2,200 businesses.

There are three interest rate terms. The first is a 0 percent interest rate for up to 18 months, with repayment deferred for up to 6 months; 3 percent interest rate for up to 5 years for for-profit businesses, with repayment deferred for up to 12 months; and 2 percent interest rate for up to 5 years for tax-exempt businesses, with repayment deferred for up to 12 months.

In order to be eligible, businesses must have 100 or fewer employees, a Business Tax Registration Certificate with the City of Los Angeles’ Office of Finance, and have primary business operations within the City of Los Angeles boundaries. Although there is no credit minimum, business owners must have “reasonable and responsible personal credit history,” with any debts and bankruptcies occurring at least 12 months ago. Any business owners who own more than 20 percent must guarantee the loan.

Please check the Los Angeles Emergency Microloan Program for the documents needed when applying.

Facebook Small Business Grants Program

Facebook announced that it will be giving $40 million in grants to 10,000 small businesses in 34 U.S. locations (based off of where Facebook employees live and work) that have been impacted by the COVID-19 outbreak. The majority of the grants will be distributed in cash, with some in ad credits.

The program is part of a larger $100 million grant program for up to 30,000 small businesses in 30 countries. The grants can be used to help cover operational costs and/or rent. Facebook will provide more details to come on how businesses can apply.

Eligible businesses must have between 2 and 50 employees, been in business for over a year, been negatively impacted by COVID-19 and be in or near a location where Facebook operates. In a Facebook post, COO Sheryl Sandberg announced that businesses can start applying the week of April 6.

Facebook also announced a number of other tools designed to support small businesses, such as customizable digital gift cards and fundraisers.

Google ad credits

Google is pledging a total of $800 million in resources to help small businesses and those responding to the coronavirus pandemic, $340 million of which will be in Google Ad credits.

Google will automatically add the credits to eligible accounts, which will be useable until the end of 2020 and can be used on any of Google’s ad platforms. Accounts must have been active since January 1, 2019, and will be notified in the coming months if they receive the credits.

Amazon’s Neighborhood Small Business Relief Fund

Amazon has pledged $5 million to help the small businesses around its Seattle headquarters, titled the Neighborhood Small Business Relief Fund. In order to apply for one of these grants, businesses must employ fewer than 50 people or earn less than $7 million in revenue, and operate in the South Lake Union and Belgrade neighborhoods of Seattle or in the city of Bellevue.

Businesses must be in the service or retail industry (e.g. restaurants, beauty salons, car washes, etc.) and open to the public, and can use the funds to their discretion, although it’s expected that businesses will use them to cover operating expenses.

For more tips go to our business continuity toolkit with the latest resources on how to deal with the pandemic