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Coronavirus: Small and Mid-Size Business

Help for Business Owners

The federal government is working overtime to help small businesses weather the coronavirus storm. To absord the immediate shock, the recently-passed CARES Act will provided more than $376 billion in relief for struggling small businesses, which falls into two main buckets: Access to Capital and Small Business Support. On April 23, Congress passed another $484 billion funding package to again support America's small businesses.

Access to Capital: The PPP, Debt Relief and Disaster Grants

  • Forgivable loans to small businesses to pay employees and keep them on the payroll. These loans are open to most businesses under 500 employees, non-profits, the self- employed, startups, and cooperatives.
    • The bill establishes a new guaranteed loan program at SBA for small businesses to cover payroll during the immediate crisis. The Paycheck Protection Program will provide 100 percent guaranteed, low interest, no fee loans of up to $10 million with repayment deferred for at least six months and forgive up to 100 percent of the loan if the borrower has retained the same number of employees as when they received the loan.
    • Baltimore County prepared an excellent guide on how small business owners seeking to secure PPP loans during the second round of funding can maximize their chance at success. Click here for more.
    • Click here to access the federal Small Business Administration's frequently-asked-questions on the PPP.
  • Debt relief for current and new SBA borrowers. SBA will pay the principal and interest for the next 6-months on SBA-backed loans. This will help 320,000 small businesses and any new borrowers in the 7(a) or 504 programs.
  • Disaster grants. Using the current economic injury disaster loan program, SBA can provide up to $10,000 to applicants within 3 days of applicants self- certifying they are eligible.
    • The bill creates a new $10 billion grant program, leveraging SBAs Office of Disaster Assistance infrastructure, to provide small businesses with quick, much needed capital. Small businesses, cooperative, ESOPS, private non-profits, independent contractors and the self- employed would be eligible to receive up to $10,000 to cover immediate payroll, mortgage, rent, and other operating expenses while they wait for additional relief to be processed.
    • Lines of credit are available for virtually all business in the form of loans up to $2 million which can be spread out over 30 years. The House Committee on Small Business has put together a factsheet that may be helpful for small businesses working to navigate the process. The factsheet is available here.
    • The process has been streamlined and simplified as much as possible. Applications can be approved within 2 to 4 weeks with cash in hand within 3 to 5 calendar days. Click here to submit an application through the SBA web portal. Due to high volume, it's recommended that you submit your application during off-peak hours.
    • If you have questions, the SBA’s Baltimore District Office is ready to assist you by phone at 410-962-6195. Your local Chamber of Commerce or Small Business Resource Center are also good resources for personalized counseling.

Other Small Business Support

  • $265 million in funding for resource partners, including Small Business Development Centers and Women’s Business Centers to provide training and counseling to businesses impacted by Coronavirus.
  • A waiver of the WBC matching requirement to alleviate the need to fundraise during the emergency.
  • $10 million for Minority Business Development Agency grants to train and counsel minority- owned firms impacted by Coronavirus.
  • $675 million to provide SBA with the resources it needs to staff up and administer these new and enhanced programs.
  • Increasing the number of small businesses that qualify for streamlined bankruptcy process, by nearly tripling the debt cap to $7.5 million to help American small businesses that will need to reorganized due to the COVID-19 pandemic.

Help for Mid-Size Businesses

Funded through the CARES Act passed by Congress in March, the Main Street Lending Program will permit small and medium-size businesses to obtain bridge financing through participating lenders. The program is designed to help credit flow to businesses that were in good financial condition but now need loans to help until they have recovered from, or adapted to, the impacts of the pandemic. The availability of additional credit is intended to help companies maintain their operations and payroll until conditions improve.

Eligibility is based on firms with revenues of less than $2.5 billion in 2019, or firms with up to 10,000 employees.

The program offers 4-year loans, with floating rates, and principal and interest payments deferred during the first year to assist businesses facing temporary cash flow interruptions. The loans range in size from $500,000 to $200 million. Loans must be repaid, and require both the borrower and lender to be eligible to participate in the program.

Click here for a 1-page overview of the program.

More Information:

Lastly, business owners may want to consider reaching out to any creditors if you believe you will be delinquent on any bills that must be paid immediately. Many banks and mortgage servicers are offering agreements to freeze payments or provide no or very-low interest business loans. This could help you avoid penalties levied on late payments.

The State of Maryland has also published responses to frequently asked questions for Maryland businesses planning and responding to the coronavirus, available here. The Maryland Department of Commerce has created a resource page for business owners and employees. For more information about additional resources that may be available to you, click here.