A main focus for businesses in need of capital recently has been the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which expanded the criteria under which borrowers could apply for loans through the U.S. Small Business Administration (SBA), notably through the Paycheck Protection Program (PPP). The most significant change to the PPP has been the determination that US businesses owned by foreign companies are now eligible for loans. For an overview of the terms and conditions of the program, please see our prior alert.
However, the PPP is only one of the programs currently available to businesses. In addition to these loans, state and local agencies, as well as private companies, have established emergency relief funds to issue grants and loans to local businesses. Below are a few examples of programs that are currently in place.
The State of California Small Business Finance Center (SBFC), through the California Infrastructure Economic Development Bank (IBank), is offering $50M in loan guarantees to small businesses (and certain eligible nonprofits) with between with 1-750 employees that have been negatively impacted or experienced disruption by COVID-19. Interest rates are negotiated between the borrower and lender directly.
The California Department of Tax and Fee Administration has also set up Small Business Relief Payment Plans under which small businesses with less than $5 million in taxable annual sales, can apply for 12-month, interest-free, payment plans ranging up to $50,000 of sales and use tax liability.
Several cities in California have also established emergency relief funds. The City of Los Angeles established a Small Business Emergency Microloan Program, which is offering loans $5,000 to $20,000 at an interest rate of 0-3%.
San Francisco established the San Francisco Hardship Emergency Loan Program (SF HELP), which gives businesses the option of applying for loans of up to $50,000 at 0% interest. San Francisco also established the Workers and Families First Program, which will reimburse employers $15.59 per hour (up to 40 hours) in order to provide extra sick leave for their employees.
New Jersey is launching a program to offer financing to small businesses and non-profits with less than $5 million in annual revenue. Eligible businesses may apply for loans of up to $100,000.
The Working Washington Small Business Emergency Grant Program offers grants of up to $10,000 for businesses affected by the COVID-19 outbreak. However, due to the large volume of applications, only businesses in certain counties are still eligible to apply. Live updates on eligibility and a link to the application can be found here.
New York had previously been accepting applications to its New York City Small Business Continuity Fund, which provided up to $75,000 in interest-free loans. While this program has been paused, businesses can sign up for the NYC Department of Small Business Services mailing list in order to find out about new programs as they become available.
For non-profit organizations based out of New York City, the Nonprofit Finance Fund is offering is offering loans of at least $100,000.
Private Sector Assistance
In addition to state and local initiatives, private companies have established funds for small business loans. Amazon launched a Neighborhood Small Business Relief Fund to assist businesses in Bellevue, Washington and the South Lake Union and Regrade neighborhoods of Seattle. Facebook will create a fund of $100 million to give cash grants and ad credits to up to 30,000 eligible small businesses globally. Although the program is not yet active, businesses can sign up to receive email updates for when the grants will become available.
Revel has also created a $1 million fund to allocate to small businesses affected by COVID-19. Although they have received a large volume of applications, applications are still being considered and will be considered on a first come first serve basis, if the fund is replenished.
These loan programs are becoming increasingly popular while resources for these funds are finite. Businesses who have been affected by the COVID-19 outbreak and meet the eligibility requirements for these programs are encouraged to apply as soon as possible in order to ensure the most beneficial payouts.
As you are aware, things are changing quickly and the aid measures and interpretations described here may change. This article represents our best understanding and interpretation based on where things currently stand.
*This alert is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. Please contact your Sheppard Mullin attorney contact for additional information.*