We think it's important for you to understand how we make money. It's pretty simple, actually. The offers for financial products you see on our platform come from companies who pay us. The money we make helps us give you access to free credit scores and reports and helps us create our other great tools and educational materials.
Compensation may factor into how and where products appear on our platform (and in what order). But since we generally make money when you find an offer you like and get, we try to show you offers we think are a good match for you. That's why we provide features like your Approval Odds and savings estimates.
Of course, the offers on our platform don't represent all financial products out there, but our goal is to show you as many great options as we can.
If you own a small business, you’re probably worried about the effects of the COVID-19 pandemic.
In fact, an April 2020 poll by the U.S. Chamber of Commerce and MetLife found 85% of small-business owners were worried about how the coronavirus outbreak would affect their business. And 80% said it could take between three months and a year before things returned to normal for small businesses.
If you’re a small-business owner who thinks your business isn’t in good health right now, you may be looking for financial relief. Fortunately, the federal government has implemented multiple pieces of coronavirus rescue legislation since March, including four measures that have specific provisions for small businesses.
Additionally, the federal government offers a range of assistance programs that predate the current crisis. If your small business needs help to weather the pandemic and its economic fallout, here are some resources that may help.
Federal hardship relief
Four pieces of coronavirus legislation have either created new programs for small-business relief or provided funding for existing programs, including the following:
- The Coronavirus Preparedness and Response Supplemental Appropriations Act
- The Families First Coronavirus Response Act
- The Coronavirus Aid, Relief and Economic Security, or CARES, Act
- The Paycheck Protection Program and Health Care Enhancement Act
The small-business provisions of the acts fall into two basic categories: funding and tax breaks.
Paycheck Protection Program
Having to lay off or furlough valued employees can be emotionally and financially devastating to small-business owners. The Paycheck Protection Program, which was created under the CARES Act, aims to help small businesses keep workers on the payroll.
The Paycheck Protection Program offers low-interest (1%) loans up to $10 million. If you receive a Paycheck Protection Program loan, you may not have to pay some, or even all, of it back provided you meet forgiveness requirements. Your loan can be forgiven if you use the funds to pay specific expenses, which include utilities, workers’ pay, health insurance premiums, mortgage or lease payments as well as interest on debt taken out before Feb. 15, 2020. At least 75% of the forgiven amount must go toward payroll costs.
Though the program ran through its initial funding quickly, the federal government has put more money into it. The Paycheck Protection Program will continue to make low-interest loans to small businesses, but the application period closes on Aug. 8, 2020.
SBA debt relief
If you already have certain Small Business Administration–funded loans, the CARES Act calls on the SBA to cover six months of your payments — including principal, interest and fees. The debt relief applies to 7(a), 504 and microloans — either existing ones in good standing or new ones disbursed before Sept. 27, 2020.
This relief is supposed to be automatic, but if you qualify for it and your lender has still been collecting payments from you, the SBA says you should reach out to your lender.
Additionally, existing SBA-serviced disaster loans (for home and business) in good standing will receive automatic deferral of payments through Dec. 31, 2020. Interest will continue to accrue, and you’ll need to resume making regular payments after the deferment period ends.
Disaster loans and advances
Eligible businesses with 500 or fewer employees may be eligible for Economic Injury Disaster Loan, or EIDL, advances of up to $10,000. The advance wouldn’t have to be repaid.
The CARES Act allows for EIDL advances for all small businesses.
By now, you’re probably aware that the filing and payment deadline for 2019 individual and business income taxes has been postponed from April 15, 2020, to July 15, 2020.
But the postponement also applies to a number of other types of forms and payments. IRS notices 2020-23 and 2020-20 provide more detail. Additionally, all states with personal income taxes and the District of Columbia have postponed their filing and payment deadlines — though not all have extended to July 15.
Coronavirus legislation has expanded paid family and sick leave to require certain employers to cover employees who can’t work because of the pandemic. The expanded leave covers people who may be quarantined because they have the coronavirus or who are self-quarantined, seeking medical diagnosis of symptoms, caring for someone sick with COVID-19 or caring for children whose school or daycare is closed because of the crisis.
The amounts of paid leave vary, but regardless of the type of leave your employee may qualify for, you may be eligible for a sick leave tax credit if you meet certain qualifications.The credit would be equal to the full amount of sick or family leave you were required to pay the worker, plus any health plan-related expenses and your share of the employee’s Medicare tax from April 1, 2020, to Dec. 31, 2020.
If you meet eligibility requirements, you also may be able to claim a refundable employee retention credit of 50% (up to $10,000) of wages and certain health plan costs you pay for employees between March 12, 2020 and Jan. 1, 2021. You can get the credit, which applies to payroll taxes, by either reducing your payroll tax deposits or requesting an advance credit. Keep in mind that employers who receive a Small Business Interruption Loan under the Paycheck Protection Program are not eligible for the Employee Retention Credit.
Payroll tax deferral
The CARES Act allows businesses to put off paying the employer portion of employees’ Social Security taxes for up to two years. The deferral applies to payments due after March 27, 2020, but before Dec. 31, 2020. Deferred taxes must be paid in two installments of 50%, due by Dec. 31, 2021, and Dec. 31, 2022.
The U.S. Treasury Department says the deferral is meant to help businesses maintain cash flow. Being able to postpone a tax payment could provide immediate relief to small businesses.
What other federal relief is available?
Even before the coronavirus crisis, the SBA offered multiple loan programs to provide working capital, additional funding and financial support to small businesses. SBA loan programs include the following:
- The 7(a) program provides loans of up to $5 million.
- The Express loan program offers loans up to $350,000 for up to seven years.
- A Community Advantage loan helps mission-based lenders make loans of up to $250,000 to small businesses in underserved markets.
- Loans through the 504 loan program foster economic development and promote the creation or retention of jobs. Limitations apply on how you can use the loan money.
- The Microloan program works with nonprofit lenders to help small businesses in underserved markets with loans of up to $50,000. Limitations apply on what you can use the funds for.
Of course, each program has specific eligibility requirements. The SBA has established these general criteria to qualify.
- Your business must meet size standards
- It must be for-profit and operating in the U.S. or a U.S. territory
- You must have invested your own time and money into your business
- You haven’t been able to get funds from other lenders.
State small-business relief
States generally have government organizations designed to support small businesses during both times of crisis and ordinary economic conditions. You can start looking for state small-business relief by visiting your state’s economic development web page.
Additionally, some states have created special programs to provide small businesses with financial assistance during the coronavirus pandemic. Here are some examples of state initiatives.
- Illinois will make emergency loans through its Illinois Small Business Emergency Loan Fund and grants through the Downstate Small Business Stabilization Program. Businesses must meet qualifications to participate.
- Connecticut offered bridge loans to help eligible small businesses manage cash flow during the crisis. The initial round of funding for the program has closed.
- Kentucky created a business stimulus fund that offers grants of up to $3,000 for qualifying businesses.
Keep in mind that things continue to change quickly as the pandemic’s effect on businesses continues. If you find a state program you think your small business might qualify for, be sure to check that the program is still accepting applications and that you meet eligibility requirements.
Whether your state reopens quickly or continues measures to limit the spread of COVID-19, it’s likely the economic impact of the pandemic will continue to affect small businesses for quite a while. Resources are available to help your small business get through the crisis, but you may have do some research to find the right program for your needs. And if you’re struggling to repay an existing loan, it’s probably worth reaching out to your financial institution to see if the lender will work with you.
The U.S. Small Business Administration website, your state’s economic development site, and county, municipal and local chamber of commerce sites are all good places to start. Local small business relief funds have been set up in communities across the country.