Federal and state government programs are targeting small businesses with emergency loans and grants designed to mitigate the impact of the coronavirus pandemic. Many of those programs are part of the $2.2 trillion federal Coronavirus Aid, Relief, and Economic Security Act, which provides economic relief to individuals, small businesses, and industries.
Under the act, small businesses—companies with less than 500 employees—will receive $377 billion in aid, with the U.S. Small Business Administration administering $349 billion of that through the Paycheck Protection Program.
Here's a summary of the major federal programs:
- Paycheck Protection Program: SBA lenders began processing applications April 3 for this program, which provides small businesses with forgivable loans up to $10 million to cover payroll and certain other costs.
- Economic Injury Disaster Loans and Emergency Economic Injury Grants: The SBA's Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million to help overcome temporary loss of revenue. Small businesses are also eligible to apply for an EIDL advance of up to $10,000.
- Small Business Debt Relief Program: Covers six months payments on SBA loans, including principal, interest, and fees. Also provides immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans.
- Employee Retention Credit: Refundable tax credit represents 50% of up to $10,000 in wages paid by an eligible employer whose business is financially impacted by COVID-19. The credit is available to all employers regardless of size, including tax-exempt organizations, with two exceptions—state and local governments and employers that accept small business loans.
- Delay of Payment of Employer Payroll Taxes: Allows taxpayers to defer paying the employer portion of certain payroll taxes through the end of 2020. The deferred payments are due in two equal installments—at the end of 2021 and the end of 2022.