We have received numerous inquiries regarding what is included in the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) and the process to apply. Below is a brief overview on the main two ways that businesses can apply for funding now. We will continue to send updated information on the package and other funding sources. It is important to understand that the priority and focus right now is providing emergency relief to help businesses and communities get through this difficult time. While we know that significant economic development grants will be coming, these may take some more time. We are closely monitoring this process and any opportunities that come available will be shared.
Small Business Administration’s (SBA) Economic Injury Disaster Loan (EIDL)
Here are several revisions to the program that were included in the Act, most interesting is the ability for applicants to receive an advance of $10,000 in emergency cash. This advance may even be forgiven if expenditures are documented correctly, and proper documentation regarding use of the funds is required (payroll, overhead, rent, utilities, etc.). Even if you are turned down for the loan, you are still eligible for the $10,000. The option to request an EIDL Advance will be added to the SBA system within the upcoming days. In the meantime, you can still apply for a full EIDL here, but will need to reapply for the Advance when the system is updated. Other revisions are as follows:
- Expands the eligibility to sole proprietors or independent contracts, tribal businesses, cooperatives, and ESOPs with less than 500 employees, and all non-profits;
- EIDLs can be approved solely on credit score and not the ability to repay the loan;
- Waives the following: (1) the requirement of personal guarantees for loans up to $200,000, (2) the requirement that the applicant must be in business for a year (but must be in operation on January 31, 2020), and (3) the credit elsewhere test.
Paycheck Protection Program
Under this program, the SBA backs small-business loans through local lenders. The SBA and Treasury have indicated that they are hoping to have the program up by this coming Friday, April 3rd. Applications can be made through any lender that is already approved for the SBA’s 7(a) loan program. Companies employing 500 or fewer are eligible for the program, although there are some size exceptions for those with more workers (we can assist with identifying exception eligibility). Tribal businesses, veteran-owned 501(c)(19) organizations and 501(c)(3) nonprofits are also eligible. Independently owned franchises with fewer than 500 employees that are SBA-approved are eligible. Please see the attached – we think that this provides a thorough overview of the program.
We will continue to send updated information as it becomes available.