The Federal Government’s Response to Coronavirus and Its Impact on Small Business


Over the past few weeks the new coronavirus has spread quickly across the United States, with confirmed COVID-19 cases in all 50 states. The effects of the outbreak can be felt in an unprecedented economic slowdown, restrictions that have forced many businesses to close their doors indefinitely, and uncertainty that has gripped individuals, business owners, and society at large.

In response to the fallout from the pandemic, the federal government has begun to take measures that may ease, however slightly, the burden on small businesses. Near-daily press conferences and announcements bring fresh proposals and legislation that still need to be authorized and signed into law.

This effort began in earnest when in his address on March 11, President Trump laid out some steps that would be taken to slow the spread of the outbreak and soften its impact on our economy. Of the solutions highlighted, four points were particularly pertinent to small business owners. 

We’ve fleshed out these announcements in order to give you the information necessary to understand these changes’ potential impact on your business. We will keep this page updated as the government continues to roll out and implement measures to support the country’s businesses. 

SBA Programs Introduced and Funding Increased

Various pieces of legislation and government directives have been announced over the past few weeks to address the impact of the coronavirus. Of primary interest to small business owners is how the government plans to funnel financing into its disaster loan programs as well as its larger SBA loan programs. We’ll break down the relevant information as it pertains to small business owners.


On March 25, the Senate and White House officials agreed to terms on a $2 trillion emergency relief package to address the economic fallout from the coronavirus outbreak, known as the CARES Act. This bill allocates funding for direct payments to American taxpayers, for healthcare initiatives, and for small business emergency funding through the SBA.

Part of the larger CARES Act is the “Keeping American Workers Paid and Employed Act,” which outlines funding and resources specifically for small businesses. The broad strokes of that program include:

  • $349 billion for a new Paycheck Protection Program (PPP) through the SBA 7(a) loan program, providing eight weeks of cash flow assistance through 100% federally guaranteed loans to small employers who maintain their payroll during this emergency.
  • An additional $10 billion to the SBA’s Economic Injury Disaster Loan Program to help disburse smaller loans and emergency grants directly to small businesses.
  • Additional funding for existing SBA debt relief and financing counseling and training programs.

For more information on the impact of the CARES Act on small businesses, read our explainer. Keep in mind that the Senate and House of Representatives still need to pass this bill, and the president must sign it into law, before funding can become available. Many expect that to happen at the end of the week.

EIDL Funding

Earlier this month, Trump announced that he is instructing the Small Business Administration to exercise its available authority to provide low-interest capital to businesses affected by the current coronavirus outbreak. Congressional legislation addressed this need by providing $7 billion in funding for the SBA’s EIDL program through the Coronavirus Preparedness and Response Supplemental Appropriations Act. 

Economic Injury Disaster Loans (or EIDLs for short) are for small businesses in declared disaster areas who have suffered substantial economic injury as defined by the business being unable to meet its obligations and pay necessary expenses. The SBA can provide up to $2 million in assistance and stated that the loans can be used “to pay fixed debts, payroll, accounts payable, and other bills that can’t be paid because of the disaster’s impact.”

The interest rates on these loans is 3.75% for small businesses without available credit elsewhere (the interest rate for nonprofits is 2.75%), the terms do not exceed 30 years, and the repayment terms are based on your ability to repay the loan.

Unlike traditional SBA loans—which are provided by banks and partially guaranteed by the government—Economic Injury Disaster Loans are offered through the SBA.  

Learn more about how to apply for a coronavirus business loan here.

Income Tax Filing and Payment Deferment

Treasury Secretary Steven Mnuchin announced on March 20 that Tax Day will be moved from April 15 to July 15, a 90-day postponement that will allow individuals and businesses more time to file their taxes, as well as make tax payments. 

Specifically, individuals who owe $1 million or less and corporations that owe $10 million or less have an extra 90 days to pay the taxes they owe for 2019. This covers many pass-through entities and small businesses.

If you are owed a refund, you should file your taxes as soon as possible; that way you’ll receive your refund as soon as possible. According to the IRS,  most tax refunds are still being issued within 21 days.

If you don’t think you will be owed a refund, it’s best to take the extra time you’ve been given to hold on to your capital without paying penalties or interest. 

It’s best to consult with your CPA on the next steps.

Payroll Tax Relief

Trump is also asking Congress to provide immediate payroll tax relief. It’s even been reported in some places that he’s looking for a 0% payroll tax rate that would last through 2020.

In order for this to affect you and your business, it must be approved by Congress. The likelihood of this occurring is still up in the air. If it does pass, it is unknown how large the cut would be. 

As a reminder, payroll taxes include the 6.2% employees pay of their gross annual income up to $137,700 for Social Security, as well as the 6.2% tax you pay as the employer. Additionally, it includes the 1.45% employees pay for Medicare taxes and the 1.45% you pay as the employer. For wages paid in excess of $200,000 for single filers or $250,000 for joint filers, there is a Medicare surtax of 0.9% for the employee only. Finally, you as the employer pay a federal unemployment tax of 6% on wages up to $7,000. In some states, there is also a state unemployment tax, but that would not be eligible in this scenario.

Next Steps

As you can see, there are still many points on which we are waiting for clarification or for a decision from Congress. As changes are made, we will update this page. Feel free to reach out to the Fundera team with any questions or coverage you’d like to see at

Founding Editor and VP at Fundera at Fundera

Meredith Wood

Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera. 

Meredith launched the Fundera Ledger in 2014. She has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending and financial management.

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