Update, 7/6/20: The federal government has extended the deadline for new applications to the Paycheck Protection Program to Aug. 8, 2020. As of July 6, you can apply for a PPP loan through an SBA-approved lender of your choice, or start the PPP application process now through Fundera.
Overview of Coronavirus Small Business Relief Options
Americans from all walks of life are looking for guidance and help in the wake of the coronavirus outbreak. This is especially true for small business owners, whose lives and livelihoods have been upended due to the pandemic. Never before have so many businesses been forced to restrict their operations and survive despite such limited foot traffic and consumer spending.
The public health restrictions placed on the country due to the novel coronavirus are particularly hard on small businesses because one in three small businesses don’t have a rainy day fund to help deal with emergency expenses, according to the U.S. Chamber of Commerce. From restaurants to ecommerce ventures, many entrepreneurs live week-to-week and are always fighting to see another day.
That means millions of small business owners are seeking coronavirus financial relief possibilities. With that in mind, we’ve created a roundup of all coronavirus small business relief options to help you identify what might work best for your business.
Coronavirus Small Business Disaster Loans
At the federal level, hundreds of billions of dollars have been allocated to the Small Business Administration’s various loan programs thanks to the CARES Act.
The primary source of funding for small business owners is through the SBA’s Paycheck Protection Program, which disburses loans through SBA-accredited lenders to cover payroll costs as well as rent, utilities, mortgage interest, and other debt obligations. These loans may be forgiven if the borrower follows certain criteria.
In addition, the SBA is directly processing loan applications for its Economic Injury Disaster Loans (EIDL) program. An EIDL can cover fixed debts, payroll, accounts payable, and other bills. EIDLs are available for businesses in every state via the SBA website.
Note that while you can apply for and receive both a PPP and an EIDL, you cannot use them for the same purpose. In this case, you cannot use an EIDL to cover your payroll costs if you are using a PPP for that purpose.
To find out more about applying for one of these loans, visit our overview of coronavirus business loans.
Other Federal Small Business Loans and Relief
The SBA has multiple loan programs, most of which are low-interest loans for small business owners looking to expand, renovate, or otherwise fund their ventures. These include the SBA 7(a), SBA Microloan, and SBA 504/CDC loans.
The CARES Act set aside funding for the SBA to pay the principal, interest, and fees for six months for businesses that have an outstanding SBA loan impacted by the outbreak. That means you won’t need to make payments on your SBA 7(a) loan or other federal business loans until later this year.
Learn more about SBA 7(a) loans here.
In addition, in lieu of taking out a PPP loan, your business can take advantage of a new payroll tax credit, called the Employee Retention Credit. This credit is fully refundable and is equal to 50% of qualified wages paid to employees.
Tax Deadline Extensions
The federal government recently announced an extension of the income tax filing and payment deadlines to July 15, 2020. That means many small business owners (such as sole proprietors, LLCs, and corporations filing a tax bill for less than $10 million) will be able to hold on to capital without racking up interest payments and late fees for an additional three months.
If you think you’ll need more than the additional 90 days to submit your tax return, you can file for a six-month extension using IRS Form 4868. Just make sure to submit the request before the new July 15 deadline.
State tax deadlines will likely end up mirroring federal deadlines, but make sure that’s the case by reviewing this deadline resource from AICPA to see where your state stands.
State and Local Government Financial Resources
Some state and local (city and county) governments have begun setting up and pivoting programs to provide financial assistance to small businesses affected by the pandemic. This includes Rapid Response teams, no-interest loans, grants to cover payroll, and more. Get in touch with your local Chamber of Commerce or visit our state-by-state coronavirus resources guide for more information.
Small Business Grants
Both public and private organizations have announced or rolled out grant programs for small businesses affected by the pandemic. Companies such as Facebook and Amazon, and governments in New York, Michigan, and Wisconsin have announced such programs. Visit our list of small business grants for more information.
Private, non-bank lending companies such as Kabbage, OnDeck, and BlueVine have emerged in the years following the recession as a viable source of funding for small businesses that can’t obtain SBA or other bank financing, or need financing quickly. Although the alternative lending space is in flux right now due to the pandemic, some financing options will be available to businesses looking to temporarily address cash flow issues.
Credit Card Companies
Credit cards can be useful tools for covering cash flow gaps and giving you and your business a little breathing room when it comes to making big purchases.
Of course, if your revenue streams have dried up due to the coronavirus, paying off your business credit card becomes a difficult and scary proposition. Fortunately, some credit card issuers including American Express, Citibank, Capital One, Chase, and Apple have announced various forms of aid and leniency to their customers, such as waiving service fees, late fees, and early withdrawal fees on CDs.
To learn more, contact your credit card issuer—preferably through digital channels such as their mobile apps or online chat functions, since phone lines will likely be swamped.
If you have good personal credit and need help consolidating business debt, you might also look into credit cards with a 0% introductory APR for a period usually lasting nine-12 months. Note that once that intro period ends a variable interest rate will kick in and will depend on your creditworthiness and the prime rate.