Financial Resources For Employers Impacted By COVID-19
While the COVID-19 crisis continues to impact businesses large and small, government entities and lending institutions are working hard to provide relief. Please review the following information for insight into the resources that are currently available to your business.
Remember, as you consider whether this option is right for your situation, know that the funds are only available for working capital losses due to the virus. They are not to be used for the expansion of operations or consolidation of debt. In short, this financial assistance can be used to support on-going operations and to cover the costs/expenses that are necessary to stay afloat. Private nonprofits are also eligible to receive SBA disaster relief.
IMPORTANT: Those who have applied for a Disaster Relief Loan prior to the CARES Act being signed into law MUST reapply at the SBA's new portal to receive the forgivable $10,000 loan advance.
A key tool in America's economic recovery toolbox has been the Paycheck Protection Program (PPP), which came into existence as a way to provide financial relief to businesses with 500 or fewer employees, not-for-profit organizations, veterans' organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors. The original deadline to apply for these funds was June 30, 2020. However, as a result of the continued need demonstrated by organizations that had suffered economic hardship due to COVID-19, the government pushed the deadline to apply for these funds to Aug. 8, 2020. Additionally, on May 15, 2020, the Small Business Administration released it's much anticipated PPP Loan Forgiveness Application. To learn more about these programs (and others), click the links below.
Financial Assistance For Small Businesses
The Small Business Administration has had special loan programs to support small businesses for years. The Coronavirus Aid, Relief, and Economic Security (CARES) Act uses that infrastructure to focus the distribution of emergency funds directly to small businesses to help them continue to keep their employees on the payroll. Check out the links below for more insight into the financial resources that are now available to employers.
Finally, as it relates to the CARES Act, we have found a very helpful FAQ document, The Small Business Owner's Guide to the CARES Act, from the Senate Committee on Small Business and Entrepreneurship. Please take a look as it will likely answer many of the questions you may have about the CARES Act and impact on your small- to mid-sized business.
Main Street Lending Program
The Main Street Lending Program is a new loan program that was recently announced by the Board of Governors of the Federal Reserve with financial support from the Department of the Treasury. Here is a high-level overview:
- This program is available for any business that was established prior to March 13, 2020, and has:
- Up to 15,000 employees OR
- 2019 annual revenues of less than $5 billion
- You must have at least $83,333 in EBITDA in 2019 to qualify.
- The amount you can borrow is 6x your EBITDA minus your funded debt or credit lines (no including PPP) on the date you apply for the loan.
- The minimum loan amount is 6x EBITDA, or $500,000.
- The maximum loan amount is $25 million
- There are no prepayment penalties.
- This program can be leveraged alongside PPP and EIDL programs.
The terms of the loan are as follows:
- 4 years
- LIBOR (1 month or 3 months) plus 300 basis points, depending on the underwriting
- No payments due for the first 12 months (unpaid interest will be capitalized)
- Principal amortization of at least 15 percent at the end of the second year, 15 percent at the end of the third year, and a balloon payment at 70 percent at the end of the fourth year
- No forgiveness opportunities
If you think this program might be applicable to your situation, please contact your Rea advisor.
Free On-Demand Webinars
Paycheck Protection Program: The Final Chapter? - Released June 26, 2020
Ohio Small Business Development Centers
Here is a list of several of Ohio's Small Business Development Centers. Please let us know if you would like us to include additional counties.