Financial Resources During Coronavirus Crisis
As we all know, the Coronavirus (Covid-19) originated from China and is sweeping around the world. It has reached every state in the US and continues to spread. The United States has moved into crisis mode and trying to slow down and stop the spread.
Yesterday, Governor DeSantis executed Executive Order 20-91 (read the whole thing here). The summary of it is that all non-essential businesses are ordered to shut down and “all persons in Florida shall limit their movements and personal interactions outside of their home to only those necessary to obtain or provide essential services or conduct essential activities.” It goes into effect April 3 at 12:01 AM (Thursday night / Friday morning). And remains in effect until April 30 at 11:59pm.
Essential businesses are allowed to stay open. In Section 2 on Page 3 of the Executive Order 20-91 it lists the essential businesses. Basically if your business aids in the health or basic needs of a person, aids in the safety of a person or aids in helping essential businesses operate, then you are considered essential.
This, obviously, will have dramatic effect on many businesses in a myriad of different ways. Those that provide many things needed for basic living, like food and toilet paper, are seeing a boom in their business. While others who sell retail items like furniture or clothing are ordered to shut down and could see a decline in their business.
Regardless of which side of the coin you are on, your business will be affected in some way. Even those who have an increase in sales may have to reduce their hours of operation and employee count.
The Federal Government has created 2 ways to help small businesses with financial resources during this time. One is the EIDL and the other is the PPP. The Federal Government as issued the SBA $350 billion towards this facilitation. Here is a link to the page where you can read about them both – https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources. And this is available to small businesses with 500 employees or less.
The EIDL is the Economic Injury Disaster Loan. You apply for this online with the SBA (click here). The EIDL takes about 15 minutes to fill out. It will allow you to request a $10,000 advance. And, from all of the sources we polled, the advance is a grant so you do not have to pay it back. Then the SBA will contact you about the loan application process. The EIDL will loan businesses up to $2 million for 30 years at 3.75% interest. This loan is directly issued and administered by the SBA.
The PPP is the Paycheck Protection Program. The application for it will be available online, at many banks, starting April 3, 2020. This is backed by the SBA but it is administered through your bank. The PPP takes your payroll expenses for 1 month and will issue you a loan for 250% of that amount. The loan is at 4% interest and has a $10 million cap.
It can be used for payroll, keeping group benefits, mortgage interest (no principal) payments, rents including under a lease agreement signed before 2/15/20, utilities and interest (no principal) on any other debt that was incurred prior to 3/1/20. To clarify, payroll costs include salaries, wages, and payments paid to employees and independent contractors, including yourself, up to $100,000 each. It also includes medical insurance payments, retirement benefits, state/local tax, and payments for sick leave, family leave, or vacation.
No collateral is required. No personal guarantee is required. And the loan is 100% non-recourse. That means there is no penalty for not paying it, at all. But there is an even more unique part of this. If you maintain your workforce past the 8 week time period (after you receive the funds), the principal can be completely forgiven. So, all you would owe is the 4% interest on it.
Contact your bank to find out their process for application.
The Coronavirus Pandemic and Crisis is affecting us all. We urge everyone to seek accurate and up to date information for your personal health and the health of your business. We will continue to monitor the situation and provide any other business or financial information or insight that we acquire and pass it along to you here. If you have any questions, feel free to reach out to us and we will do our best to help.
We wish everyone to stay safe and stay well.
