How do you apply for small business funds from stimulus package? -

How do you apply for small business funds from stimulus package? -

How do you apply for small business funds from stimulus package? -

Posted: 28 Mar 2020 05:06 AM PDT

Small businesses around the country got a $370 billion lifeline in the $2 trillion Coronavirus Aid bill approved Friday by the U.S. House of Representatives. The largest stimulus in U.S. history, the bill includes relief for taxpayers and large corporations as well as small businesses.

But those businesses want to know - what kind of relief will it provide?

Dave Ketchen is the Harbert Eminent Scholar and Professor of Management at Auburn University, and he has been looking over the legislation. He said time is perhaps the biggest factor in question.

"I definitely think it's a much needed life preserver," he said. "A big question is on the implementation side. If you throw a life preserver to somebody and they drown before they get it, it didn't do them any good. A big question is how quickly is this money going to get into small business people's hands."

In short, he said the package employs a three-pronged approach.

The first part offers emergency grants of up to $10,000 from a $10 billion fund.

"That's a nice little temporary lifeline," Ketchen said. "You can think about making your payroll, which should help." This money will also provide a jolt to the economy, as companies provide the money to employees, who will in turn go out and spend it on food and necessities, boosting an economy brought to its knees by the pandemic's sheltering requirements, he said.

The second part is relief for existing SBA loan holders from a fund of $17 billion, which is meant to cover six months of payments.

The bulk of the package is $350 billion in new forgivable loans, with loans available of up to $10 million per business, based on how much the company paid its employees between Jan. 1 and Feb. 29. The loans will carry an interest rate up to 4 percent.

According to MarketWatch, the Small Business Administration will oversee the Paycheck Protection Program to distribute the money that can be partially forgiven if the companies meet certain requirements. The loans will be available to companies with 500 or fewer employees.

The package allows banks to lend directly to businesses with loans backed by the SBA.

Here is the full text of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The SBA has a website devoted solely to Coronavirus measures. Here's where you can apply.

If the business uses the loan funds for the approved purposes and maintains the average size of its full-time workforce based on when it received the loan, the company will only need to pay back the interest accrued.

According to The New York Times, businesses would not have to repay portions that were spent on paying employees, a mortgage, rent or utilities. Approval is expected to take about two weeks. Business owners also won't have to provide personal guarantees or use all their available assets as collateral.

Businesses that have recently laid off workers would be required to repay a larger portion of their loans, and loans covering salaries of more than $100,000 a year would not qualify for forgiveness.

Ketchen said the effectiveness of the package will be evident based on how long coronavirus measures are needed.

"If economic activity has picked up by the end of May, I imagine this program will have saved thousands upon thousands of small businesses," he said. "If this stretches into the second half of the year, probably no amount of money is going to save those folks."

Ketchen also provided a few answers for small businesses on Auburn's COVID-19 resources page.

Small Business Administration’s New Boss Has Big Job Ahead - The Wall Street Journal

Posted: 28 Mar 2020 07:35 AM PDT

WASHINGTON—Jovita Carranza, the newly appointed head of the Small Business Administration, just found herself leading the charge in one front in the epic battle against the coronavirus pandemic.

With the pandemic threatening to engulf many of the country's 30 million small businesses, the 70-year-old Ms. Carranza is now the Trump administration's point person on shoring up a sector of the economy that accounts for 44% of gross domestic product, by the agency's estimates.


Applications Open for San Diego’s Small Business Relief Fund - Times of San Diego

Posted: 27 Mar 2020 11:15 PM PDT

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Some restaurants have closed while others continue to prepare take-out meals
Casa de Pico in downtown La Mesa is closed during the epidemic. Photo by Chris Stone

San Diego small businesses adversely affected by the COVID-19 pandemic can now apply for the city's Small Business Relief Fund, with the application website opened at 5 p.m. Friday.

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The $6.1 million fund provides grants and micro-loans ranging from $10,000 to $20,000 to help local small businesses retain employees and stay afloat amid various federal, state and local public health orders aimed at reducing the spread of COVID-19.

San Diego Mayor Kevin Faulconer announced the economic relief package last week, which has since increased from an initial $4 million announced by the city to $6.1 million.

The program is open to businesses that can show they have sustained economic hardship due to COVID-19, have a city business license and have been in operation for at least six months, Faulconer said in an announcement earlier this week.

Business with more than 100 employees, nonprofits and home-based businesses are among those ineligible for the fund.

Applications were available beginning at 5 p.m. at, according to city officials.

However, there were reports of heavy use and difficulty accessing the website immediately after it opened.

— City News Service

Applications Open for San Diego's Small Business Relief Fund was last modified: March 28th, 2020 by Debbie L. Sklar
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Who Is Eligible For Small Business Loans In The Economic Stimulus Package? - Forbes

Posted: 27 Mar 2020 07:50 PM PDT

President Trump signed the third and final economic stimulus package into law this afternoon.  The law provides clear guidelines on what small businesses are eligible, and what their loans will look like.  Here are the details.

The total amount of money going in the fund is $349 billion.  The loans are federally-guaranteed (meaning there is no interest on the loan), and tax-free.  All loan payments are deferred for one year.

Any business with less than 500 employees is eligible for the loan.  All states and territories are eligible. Self-employed individuals, independent contractors, and sole proprietors are also eligible.

Priority will be given to businesses in under-served and rural markets, including veterans and members of the military community, women, socially and economically disadvantaged individuals, and businesses that are less than two years old, reads the text of the bill.

More than 1,000 lending agencies will be participating in the program, according to a spokesperson for Senator Marco Rubio.

 How Does the Loan Work?

The loan is forgivable, meaning it doesn't have to be paid back, during what is called a "covered period."  This period is eight weeks, chosen by the small business owner and the lending agency, between February 15, 2020 and June 30, 2020. 

The total amount of this forgivable loan, which is more akin to a grant, is 2.5 times the businesses' monthly operating costs.  The maximum amount that can be given to a single business is $10 million.

All operating costs, including employee payroll (and other forms of compensation), employee health care, mortgage, rent, utilities, and debt payments are included.  The quarterly payroll cost for an employee cannot be more than $33,333 (i.e., the equivalent of an annual salary of $100,000).

If a small business had to lay off employees during the covered period, the forgivable amount of the loan will also be reduced proportionally.  For example, if a small business cut back half of their workforce, the amount of the loan will be reduced by 50%. If employee salaries were reduced by more than 25%, the loan will be reduced proportionally.  But, if all employees are rehired and their full salaries restored by June 30, no reduction of loan will occur. 

If the crisis continues longer than expected, the law can be amended and the time period extended, according to a spokesperson for Senator Marco Rubio.  The eight-week period was determined in discussions with business industry leaders.

To expedite the loan process, personal guarantees have been waived. All that is required is a "good faith certification" that your business has been affected by the COVID-19 pandemic, and that the funds will be used according to the guidelines. 

"Our best guess is that by two weeks it will be up and running," according to a spokesperson for Senator Marco Rubio.

Additional resources have been assembled by the Small Business Investor Alliance, and can be found here.

The U.S. Senate Committee on Small Business & Entrepreneurship has put together a list of frequently asked questions that can be found here.


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