Businesses often need help to weather the adverse results of natural disasters like hurricanes and earthquakes. While most disasters cover only a portion of the country, COVID-19 has rocked the entire nation. The business world’s recovery depends in part on funds that will shore up small businesses until our lives return to normal. During this troubling time, many small business owners may turn to the Small Business Administration, especially for COVID-19 assistance.
SBA disaster loans are provided to areas covered by a disaster declaration. For example, the Louisiana governor may issue a declaration for parts of Louisiana because of devastating floods. People living in areas included in the declaration can apply for loans.
The entire United States and its territories are eligible for disaster loans because of the COVID-19 pandemic.
NOTE: As of the writing of this article, the SBA was unable to accept new COVID-19 loans because the program has depleted its $349 billion original appropriations. However, President Trump and lawmakers are attempting to secure more funding. It is still important to understand the programs made available by the CARES Act.
The CARES Act Offered COVID-19 Assistance
When faced with a disaster as enormous as COVID-19, the lawmakers and President Trump responded by preparing what may be the biggest economic relief bill in our country’s history. President Trump signed the bill into law on March 27, 2020.
The Coronavirus Aid, Relief and Economic Security Act (CARES Act) offers a number of benefits, including COVID-19 assistance focused on the needs of small businesses – the Paycheck Protection Program (PPP).
Eligibility for the Paycheck Protection Program
Small businesses and private, nonprofit organizations may apply for Economic Injury Disaster Loans (EIDL). According to the SBA Interim Rule, lays out eligibility, including but not limited to:
- Having 500 or fewer employees whose principal place of residence is in the United States; or
- Being a business that operates in a certain industry and meets the SBA size standards for that industry.
EIDL Loans, in Greater Detail
Businesses are expected to use EIDL loans gotten through the PPP program for fixed debts, payroll, accounts payable, and certain other bills that cannot be paid due to the disaster.
Interest rates are 3.75% for small businesses and 2.75% for non-profit groups.
Some small business owners can apply for COVID-19 assistance in the form of a loan advance of up to $10,000. Businesses do not have to repay the advance.
There have been reports of discrepancies between the CARES Act and the SBA loan offerings. More information may be released, especially Congress appropriates more money for the PPP program.
Does Your Small Business Need COVID-19 Assistance?
Hopefully, more funds will be available for COVID-19 assistance by the time this article is published. As you work to operate or reopen your business, you may run into some surprising legal issues.
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with business and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.