What federal or Small Business Administration (SBA) financial assistance programs are available for my business?
The U.S. Senate Committee on Small Business and Entrepreneurship has prepared a Small Business Owner’s Guide to the CARES Act on all of the forthcoming federal resources. SBA has also established a dedicated page of Coronavirus (COVID-19): Small Business Guidance & Loan Resources for all current and pending assistance pertaining to economic relief during the current crisis.
New Jersey has also compiled information regarding other federal competitive grant opportunities, some of which are open to businesses. The Small Business Administration is administering the following COVID-19 relief programs.
Paycheck Protection Program (PPP)
On March 31, SBA Administrator Jovita Carranza and Treasury Secretary Steven T. Mnuchin announced the implementation of The Paycheck Protection Program, established by the CARES Act. These new loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
More information and loan forgiveness applications are available at: https://www.sba.gov/funding-programs/loans/paycheck-protection-program-ppp
Economic Injury Disaster Loans (EIDLs)
Update 8/25/2020: While Economic Injury Disaster loans (EIDL) are still available, SBA is no longer giving out EIDL advances.
On June 15, 2020, SBA began accepting new Economic Injury Disaster Loan (EIDL) and EIDL Advance applications from qualified small businesses and U.S. agricultural businesses. Applications can be accessed via the SBA’s COVID-19 relief webpage.
All New Jersey counties are now approved for federal disaster assistance, making New Jersey businesses eligible to apply for Economic Injury Disaster Loans (EIDLs). These are working capital loans to help small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, non-profit organizations of all sizes meet their ordinary and necessary financial obligations that cannot be met as a direct result of the disaster. These loans are intended to assist through the disaster recovery period.
To see whether you might qualify for this program, use the NJ COVID-19 Business Support Eligibility Wizard.
To be eligible for EIDL assistance, New Jersey-based small businesses or private non-profit organizations must have sustained economic injury, as well as being located in a disaster-declared county or contiguous county, which all New Jersey counties currently are.
- Credit History – Applicants must have a credit history acceptable to SBA.
- Repayment – Applicants must show the ability to repay the loan.
- Collateral – Collateral is required for all EIDL loans over $25,000. SBA takes real estate as collateral when it is available.
- SBA will not decline a loan for lack of collateral, but SBA will require the borrower to pledge collateral that is available.
The interest rate is determined by formulas set by law and is fixed for the life of the loan. The maximum interest rate for this program is 3.750 percent.
The law authorizes loan terms up to a maximum of 30 years. SBA will determine an appropriate installment payment based on the financial condition of each borrower, which in turn will determine the loan term.
The law limits EIDLs to $2,000,000 for alleviating economic injury caused by the disaster. The actual amount of each loan is limited to the economic injury determined by SBA, less business interruption insurance and other recoveries up to the administrative lending limit. SBA also considers potential contributions that are available from the business and/or its owner(s) or affiliates.
Applicants may apply online, receive additional disaster assistance information and download applications at covid19relief.sba.gov.
Applicants may also call SBA’s Customer Service Center at (800) 659-2955 or email email@example.com for more information on SBA disaster assistance. Individuals who are deaf or hard-of-hearing may call (800) 877-8339.
Completed applications should be mailed to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155
Economic Injury Grants
Economic Injury Grants are no longer available. These grants provided an emergency advance of up to $10,000 to small businesses and private non-profits harmed by COVID-19 within three days of applying for an SBA Economic Injury Disaster Loan (EIDL).
SBA Debt Relief
As part of SBA's debt relief efforts,
- The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months.
- The SBA will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020.
For current SBA Serviced Disaster (Home and Business) Loans: If your disaster loan was in “regular servicing” status on March 1, 2020, the SBA is providing automatic deferments through December 31, 2020.
What does an “automatic deferral” mean to borrowers?
- Interest will continue to accrue on the loan.
- 1201 monthly payment notices will continue to be mailed out which will reflect the loan is deferred and no payment is due.
- The deferment will NOT cancel any established Preauthorized Debit (PAD) or recurring payments on your loan. Borrowers that have established a PAD through Pay.Gov or an OnLine Bill Pay Service are responsible for canceling these recurring payments. Borrowers that had SBA establish a PAD through Pay.gov will have to contact their SBA servicing office to cancel the PAD.
- Borrowers preferring to continue making regular payments during the deferment period may continue remitting payments during the deferment period. SBA will apply those payments normally as if there was no deferment.
- After this automatic deferment period, borrowers will be required to resume making regular principal and interest payments.Borrowers that cancelled recurring payments will need to reestablish the recurring payment.
- More information can be found here: https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-debt-relief
Express Bridge Loan Pilot Program
This program allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan. If a small business has an urgent need for cash while waiting for decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan of up to $25,000.