1A is monitoring federal policies being discussed and implemented in response to the current COVID-19 pandemic. Below is information on recent federal actions to provide relief to America’s small businesses as of the morning of March 31.
President Trump and Congress have been working on multi-phase public health and economic relief measures:
Phase 1 – Emergency spending bill to boost funding for the U.S. Department of Health and Human Services (HHS), the Centers for Disease Control (CDC), and the National Institutes of Health (NIH) to assist with testing and containment, medical supplies, treatment and vaccine research, and training (enacted March 6)
Phase 2 – Families First Coronavirus Response Act (enacted March 18):
Guarantees employees of businesses with fewer than 500 employees paid sick leave or expanded family and medical leave due to specific issues associated with COVID-19:
-2 weeks of paid sick leave
-2 weeks of paid family and medical leave
-Up to an additional 10 weeks of paid expanded family and medical leave
Employers with fewer than 50 employees can be exempted from certain family and medical leave provisions if they demonstrate that the leave requirements would jeopardize the viability of the business as a going concern.
The U.S. Department of the Treasury (Treasury) aims for this relief to ultimately cost nothing to businesses:
-Employers responsible for making payments on the front end
-Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the legislation
-Applicable tax credits also extend to amounts paid or incurred to maintain health coverage
-Treasury is exploring whether direct deposit is possible
The legislation also expands eligibility for unemployment compensation, provides for free testing for COVID-19, and more.
Phase 3 – Coronavirus Aid, Relief, and Economic Security (CARES) Act (enacted March 27)
Among other provisions, the package includes:
-$377 billion in small business and non-profit assistance in the form of loan forgiveness grants, SBA emergency grants, and SBA coverage of 6 months of payments for small businesses with existing SBA loans
-Direct payments of up to $1,200 for individuals and $2,400 for couples, based on income, plus $500 per child age 16 and younger
-$500 billion for industries most affected by the COVID-19 outbreak
-$100 billion for hospitals and health systems around the country
-$150 billion for state and local governments
-Enhanced unemployment insurance
ADVOCACY – 1A worked with partners, including GNO, Inc., to communicate our support for enhancing SBA’s 7(a) loan program, better leveraging the private sector as direct lenders to help ensure cash-flow is available for businesses quickly.
The Small Business Administration (SBA) recently approved Louisiana’s request for an Economic Injury Disaster Loan Declaration. Small businesses and most non-profits in the state can now apply for low-interest, long-term loans of up to $2 million to help overcome the loss of revenue they are experiencing due to the COVID-19 crisis.
SBA Economic Injury Loans
-Available for small businesses, small agricultural co-ops, and most non-profits
-Can be used on fixed debts, payroll, accounts payable and other bills
-Interest rate of 3.75% for businesses with no credit available elsewhere
-Businesses with available credit elsewhere are not eligible
-Interest rate of 2.75% for non-profits
-Terms are determined on a case-by-case basis based on each borrower’s ability to repay (pre-disaster)
-First payment on loan deferred for one year
Expands the U.S. Small Business Administration’s (SBA) existing 7(a) loan program, providing $349 billion for small businesses, non-profits, and more to cover near-term operating expenses and keep their employees:
-Available for small businesses, 501(c)3s, Tribal businesses, and veterans’ organizations
-Can be used on payroll costs, mortgage payments, rent/lease payments, utilities, and interest on existing debt
-Loan amounts calculated using the average total monthly payments for payroll costs over the last 12 months, multiplied by 2.5
-Loans capped at $10 million
-Interest rate cannot exceed 4%
-No personal/individual guarantees required: SBA guarantees 100% of the loan
-Certain expenses will be forgiven during the 8-week period following origination of the loan