As businesses continue to grapple with the economic hardship caused by COVID-19, relief remains available to many small businesses as a result of the CARES Act. Specifically, small businesses should continue to consider the following programs:
1. Payroll Protection Program (“PPP”)
On July 4th the President signed legislation passed by both houses of Congress extending PPP so eligible businesses which have not yet applied for relief under PPP now may do so until August 8, 2020. For more information on PPP, please refer to Mika Meyers’ Index of COVID-19 Updates.
2. Kent County Small Business Recovery Program
Kent County elected to designate $25 million of the funds received from the CARES Act to provide grants to for-profit businesses located within Kent County, which have 0-25 full-time equivalent employees. To the extent a business has been directly impacted and experienced losses as a result of COVID-19, the business will be eligible to apply for an economic relief grant in one of the following amounts: $5,000; $10,000; $15,000; or $20,000. The program will initially prioritize businesses which have not yet received any COVID-19 related aid.
3. Economic Injury Disaster Loans (“EIDL”)
Economic Injury Disaster Loans remain available for small businesses and nonprofits. EIDL loans carry an interest rate of 3.75% for small businesses and 2.75% for nonprofit entities and a term of up to 30 years. EIDL loans include a grant of $1,000 per employee, up to $10,000, although in the event the borrower also obtained a PPP loan, the grant will be subtracted from the forgiveness amount of the borrower’s PPP loan. If a small business applies for an EIDL loan, the loan must be used for purposes other than the purposes for which a PPP loan was used.
4. Traditional SBA Loans
As part of the CARES Act, the SBA will pay the first six months of principal and interest for borrowers who are eligible for a traditional SBA loan and who obtain such a loan prior to September 27, 2020. Because of the requirements associated with obtaining a traditional SBA loan, any borrower who wishes to take advantage of this relief should contact its lender immediately.
5. Payroll Tax Deduction
Under the terms of the Payroll Protection Program Flexibility Act, any business may defer the employer portion of its payroll tax for the remainder of 2020, with half of the deferred amount being due on or before the end of the 2021 calendar year and the remainder being due on or before the end of the 2022 calendar year.
For more information regarding relief available to small businesses, contact Mika Meyers at (616) 632-8000.