Small Businesses Relief Programs


As it became increasingly evident that the economic impact from the COVID-19 pandemic would be both profound and prolonged, Congress passed several pieces of legislation with provisions to help small businesses stay in business and keep employees on the payroll. This included 2 rounds of funding for the Paycheck Protection Program as well as the Health Care Enhancement Act, to increase the amount of aid available to small businesses during the crisis. The funds are being rapidly depleted. Regardless of the status of these programs, business owners should familiarize themselves with all available aid to help ensure they are taking maximum advantage of the new laws, as well as other potential resources.

Programs administered by the Small Business Administration (SBA) Paycheck Protection Program (PPP) Details: A first-come, first-served, forgivable loan program designed to encourage employers to keep paying all their employees, even if the businesses have been forced to shutdown due to the virus. In order to take advantage of the program, small-business owners must submit an application to a participating lender, which then works with the Small Business Administration to guarantee the loan.

Loans may be forgiven as long as the employer uses the proceeds for payroll, rent, mortgage interest, and utilities over an eight-week period from the date of loan issuance. At least 75% of the forgiven amount must be used for payroll. Forgiveness is based on the employer maintaining or rehiring employees by June 30, 2020, and restoring salary levels. The amount forgiven will be reduced if full-time headcount declines or if wages decrease more than 25%. Amounts not forgiven will have to be paid back over a two-year period at a 1% interest rate. Loan payments will be deferred for six months, and no collateral or personal guarantees are required. Moreover, no fees may be charged, either by the federal government or the lender. Eligible employers: Businesses that may apply include those with 500 or fewer employees (or, if more than 500, those meeting the SBA's industry size standard); accommodations and food services businesses that have multiple locations employing no more than 500 employees per location; certain nonprofits and veterans organizations; sole proprietors, independent contractors, and the self-employed. Economic Injury Disaster Loan (EIDL) program Details: The EIDL program offers low-interest federal disaster loans to small businesses throughout the United States that suffer substantial economic injury due to COVID-19. Loans of up to $2 million can be used for many different types of expenses, including payroll, accounts payable, fixed debts, real estate payments, and other bills. Interest rates are 3.75% for small businesses with no other available credit and 2.75% for nonprofits. Payment can be spread over long time periods, as much as 30 years. The program is scheduled to last through December 31, 2020. Subsequently, a provision in the CARES Act allowed for EIDL loan advances of up to $10,000 to small businesses facing a temporary loss of revenue. The loan advance does not have to be repaid (i.e., it is essentially a grant) and is intended to provide a much-needed influx of cash more quickly than the EIDL loans. These grants can be used to meet certain immediate expenses, including rent or mortgage and paying sick leave to employees affected by COVID-19. Eligible employers: Businesses that may apply are those with fewer than 500 employees, including sole proprietors, independent contractors, and self-employed individuals affected by COVID-19. Businesses with more than 500 employees may be eligible if they meet the SBA's industry size standards. SBA Express Bridge Loan program These loans allow small businesses that currently have a relationship with an SBA Express lender to quickly access up to $25,000 to help replace a loss of revenue. They can be either term loans or used to bridge the gap while business owners await disbursement on an EIDL. The loans will be paid in full or in part by proceeds from the EIDL loan. SBA Debt Relief program The SBA will automatically pay the principal, interest, and fees of 7(a), 504, and microloans for six months for both current loans and new loans issued before September 27, 2020. The program also provides assistance to businesses that held an SBA-serviced disaster (home and business) loan that was in regular servicing status on March 1, 2020. The SBA is providing automatic deferments through December 31, 2020. *Interest on the disaster loans will continue to accrue during the deferment period. Borrowers who have set up an automatic payment program will need to cancel those payments if they choose to take advantage of the deferment program and will need to reestablish the automatic payments.*

Employee leave and associated employer tax credits The Family First Coronavirus Response Act (FFCRA) signed on March 18, 2020, ushered in provisions designed to protect employees affected by COVID-19, while providing relief to their employers. Family and medical leave The Family and Medical Leave Act (FMLA) was expanded to cover employees who are unable to work due to a need to care for a child whose school or day care is closed, or whose provider is unavailable due to a "public health emergency." Employees will receive at least two-thirds of their regular pay, up to $200 per day and $10,000 over the benefit period. The first 10 days may be taken unpaid, but the employee may use other available paid leave during that time frame. Up to 10 weeks of leave may be taken toward the family leave credit. The provision is in effect from April 1, 2020, through December 31, 2020, and applies to employees covered by Title I of the FMLA. Applicable employers include private businesses with fewer than 500 employees and all public employers. Emergency paid sick leave This provision covers qualified employees who are unable to work (or telework) because they are subject to a quarantine or isolation order, have been advised by a health-care provider to self-quarantine due to coronavirus concerns, or are experiencing symptoms of coronavirus and are seeking a medical diagnosis. Employees will receive up to two weeks (80 hours) of their regular pay (or, if higher, the federal, state, or local minimum wage), up to $511 per day for a maximum of $5,110 over the benefit period. An employee who is caring for someone with coronavirus, or caring for a child because the child's school or day care is closed or whose child-care provider is unavailable, may receive up to two weeks (80 hours) of sick leave at two-thirds of the employee's regular pay (or the federal, state, or local minimum wage, if higher), up to $200 per day for a maximum of $2,000. The provision covers the same period as the expanded FMLA (April 1, 2020, to December 31, 2020) and applies to the same employers. *Employers may exclude certain health-care workers and first responders. Small businesses with fewer than 50 employees are exempt from the requirement to provide paid sick leave to employees who are caring for their child due to the applicable reasons if compliance would jeopardize the viability of the business.* Associated tax credits Eligible employers can receive a tax credit for the full amount of coronavirus-related sick and family leave, plus related health plan expenses and the employer's share of Medicare tax on the leave for the covered period. The refundable credit is applied against certain employment taxes on wages paid to all employees. Self-employed individuals may be eligible for qualified sick leave equivalent tax credits (also for a maximum of 10 days):

  • Lesser of $511 or 100% of average daily self-employment income due to COVID-19 symptoms or a local quarantine/isolation order

  • Lesser of $200 per day or 67% of average daily self-employment income if caring for someone with coronavirus or caring for a child due to a coronavirus-related reason (including child's school closure)

Employee Retention Tax Credit Employers whose operations have been partially or fully suspended due to mandated shutdowns, or whose gross receipts have experienced a significant decline year-over-year compared to 2019, are eligible for an employee retention credit equal to $5,000 per employee (50% of up to $10,000 in qualified wages, including health plan expenses) paid after March 12, 2020, and before January 1, 2021. The credit applies against certain employment taxes on wages paid to all employees. Employers may reduce federal employment tax deposits in anticipation of this credit and may request an advance for any amounts not covered by this reduction. *According to the U.S. Chamber of Commerce, businesses cannot take associated tax credits and receive a PPP loan.*

Employer Payroll Tax Deferral A CARES Act provision allows employers to defer the employer's share of Social Security taxes and self-employed individuals to defer payment of certain self-employment taxes. Deferrals may occur between March 27, 2020, and December 31, 2020. *Businesses may not defer the deposit and payment of these taxes after the employer receives loan forgiveness under the PPP.*

State, regional, and local assistance In addition to the numerous federal initiatives, many states and localities are implementing their own programs. Small businesses in need of support should reach out to these agencies to research opportunities that may be available. The U.S. Chamber of Commerce has an online resource designed to help small-business owners investigate state programs.

Additional Resources

For information on the Paycheck Protection Program, review the U.S. Treasury Department