Loans, Grants, and Tax Credits: Coronavirus Relief for Small Businesses

Recent legislation introduced a variety of financial relief tools for small businesses, including loans, grants, and tax credits. Some of the aid available prevents double-dipping, so making the right choice for your business is essential.

You can start by evaluating your current situation to determine what type of assistance would best serve you, for example:

• If you're looking to get cash quickly, the Economic Injury Disaster Loan and Advance could be a good option.
• If your goal is to retain employees and continue paying wages, you might want to consider the Paycheck Protection Program.
• If you are concerned about making payments on current debt, the SBA Debt Relief Program can help with that.

To help you navigate the choices available, we've broken down the newest relief efforts most relevant to small businesses.

Loans and Grants

The Paycheck Protection Program (PPP)

The most notable relief effort included in the CARES Act is the PPP— a $3.49 billion package to help small businesses maintain or restore their payroll and employees. Through this program, banks and other financial companies can act as lenders to provide loans of up to $10 million. The highlight of the program is the 100% loan forgiveness available if the funds are used towards the defined payroll costs and employees are retained.

Most small businesses are eligible for the Paycheck Protection Program, including non-profits, faith-based organizations, and some businesses over 500 employees.

To learn more about the program, and how to apply, download our Paycheck Protection Program Toolkit.

Economic Injury Disaster Loans (EIDL)

EIDL are low-interest federal disaster loans through the SBA available to small businesses in areas experiencing a substantial economic injury. Due to COVID-19, small businesses across all US states and territories are currently eligible to apply for Economic Injury Disaster Loans.

Under the CARES Act many of the usual EIDL requirements are waived or changed. The new terms do not require personal guarantees, tax returns, or proof that you could not get credit elsewhere. Borrowers can be approved on credit score alone as long as the business was in operation on January 31, 2020.

The SBA offers Economic Injury Disaster Loans up to $2 million to cover fixed debts, payroll, rent, and other bills that can't be paid due to revenue losses. The interest rate for small businesses is 3.75% and 2.75% for non-profits with a max term of 30 years.

Read more about Economic Injury Disaster Loans.

Economic Injury Disaster Loan Advance

In response to the coronavirus, the SBA is offering an EIDL advance of up to $10,000. To take advantage of this offer, small business owners must apply for an Economic Injury Disaster Loan and then request the advance. The advanced funds will be available within three days of a successful application and do not have to be repaid.

To apply for a COVID-19 Economic Injury Disaster Loan and loan advance, click here.

SBA Debt Relief

Small businesses can apply to have the SBA cover payments on current loans for up to 6 months. The SBA will automatically pay the principal, interest, and fees on all existing and new 7(a), 504, and microloans issued before September 27, 2020.

Borrowers requesting this relief can still take out a PPP loan; however, debt relief under this program does not apply to PPP funds as they are eligible for forgiveness of their own.

Read more about SBA Debt Relief.

SBA Express Bridge Loans

This program enables small businesses with an existing relationship with an SBA Express Lender to access up to $25,000 quickly. The loan is intended to bridge the gap while waiting for the disbursement of EIDL funds.

Read more about SBA Express Bridge Loans.

Tax Credits and Payroll Tax Relief

Employee Retention Tax Credit

Similar to the tax credits available under the Families First Coronavirus Response Act, Employee Retention Tax Credits are designed to help businesses keep employees by cutting the cost to employ them.

Employers can receive credit for up to 50% of the first $10,000 in qualified wages paid to each employee between March 12, 2020 and January 1, 2021.

Note: Employers who take out a PPP loan are not eligible to receive this credit.

Learn more about Employee Retention Tax Credits and how to claim them.

Social Security Tax Deferral

Typically, employers are required to submit their portion of Social Security taxes to the IRS monthly or semi-weekly, along with their employees' share. The CARES Act allows employers to hold onto their share of Social Security taxes and pay 50% of the deferred amount by December 31, 2021 and the other 50% by December 31, 2022.

Employers who receive a Paycheck Protection Program loan can defer their share of Social Security taxes until the date their loan is forgiven.