With all the new legislation and programs that has been released in the past few weeks, it can be confusing on what is right for you and your business. What are your options?
Business Support & Available Relief Programs
In an effort to combat that confusion, Froehling Anderson created a comparison sheet on Small Business Administration's loan programs, the Coronavirus Aid, Relief, Economic Security Act (CARES Act) loan and grant programs, as well as Minnesota's Department of Employment and Economic Development loan programs.
Our goal is to simplify your research process and organize the information in a way that's easy to navigate and refer to.
SBA Disaster Loan
The SBA provides low-interest disaster loans to help businesses recover from declared disasters. The two types of loans that fall under the SBA Disaster Loan umbrella are Economic Injury Disaster Loan (EIDL) & Express Bridget Loans (EBL). Here are the key differences between the two:
SBA Economic Injury Disaster Loan (EIDL)
- Lender/Application: Directly through SBA/U.S. Treasury
- Interest Rates: 3.75% for profit & 2.75% not-for-profit
- Term: Up to 30 years
- Lending Limit: $2 million
- Qualifying Business Size: Must not exceed size standard for the industry engaged
- Available Use of Funds: Fixed expenses, payroll, payables
- Deferrals: Up to one year but interest accrues
- Forgiveness Possible: No — see Emergency Grant Program
- Uncertainty of Current Economic Conditions Necessary to Support the Ongoing Operations: No
- Prepayment Penalty: No
- Final Regulations Issued: No
SBA Express Bridge Loans (EBL)
- Lender/Application: Banks and other traditional lenders
- Interest Rates: Up to 6.5% over PRIME
- Term: Up to 7 years
- Lending Limit: $25,000
- Qualifying Business Size: Must not exceed size standard for the industry engaged
- Available Use of Funds: Survival and/or reopening of the small business
- Deferrals: Tied to EIDL
- Forgiveness Possible: No
- Uncertainty of Current Economic Conditions Necessary to Support the Ongoing Operations: No
- Prepayment Penalty: No
- Final Regulations Issued: Yes
Download: Source of Funds for Businesses Amid COVID-19.
Federal CARES Act
The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress with bipartisan support and signed into law by President Trump in March 2020. It delivers a $2 trillion relief package to protect people from the economic crisis due to COVID19. CARES Act offers two possible avenues of relief:
SBA Paycheck Protection Program (PPP)
- Lender/Application: Banks and other qualified lenders
- Interest Rates: 1.00%
- Term: Up to 2 years
- Lending Limit: Lesser of 2.5x average monthly payroll (with exclusion for HCE) or $10 million
- Qualifying Business Size: No more than 500 employees
- Available Use of Funds: Debt, fixed expenses, payroll, health, payables
- Deferrals: Six months but interest accrues
- Forgiveness Possible: Yes — based upon percentage of workers retained. Up to 100% forgivable and non-taxable for federal
- Uncertainty of Current Economic Conditions Necessary to Support the Ongoing Operations: Yes
- Prepayment Penalty: No
- Final Regulations Issued: "Interim Final" regulations issued
SBA Economic Injury Emergency Grant Program
- Lender/Application: Apply first for EIDL
- Interest Rates: N/A
- Term: N/A
- Lending Limit: $10,000
- Qualifying Business Size: Must not exceed size standard for the industry engaged
- Available Use of Funds: Debt, fixed expenses, payroll, health, payables
- Deferrals: N/A
- Forgiveness Possible: Yes — 100% forgiven
- Uncertainty of Current Economic Conditions Necessary to Support the Ongoing Operations: No
- Prepayment Penalty: N/A
- Final Regulations Issued: Yes
Minnesota Specific
Individual states' SBA offices are responsible for the delivery of Coronavirus relief options, Minnesota included. The state program relief grants include:
MN DEED Small Business Loan Guarantee Program
- Lender/Application: Banks and other qualified lenders
- Interest Rates: Banks' prevailing rates
- Term: Bank terms
- Lending Limit: 80% guarantee by DEED up to $200,000
- Qualifying Business Size: MN-qualifying small business
- Available Use of Funds: Operations
- Deferrals: No
- Forgiveness Possible: No
- Uncertainty of Current Economic Conditions Necessary to Support the Ongoing Operations: No
- Prepayment Penalty: No
- Final Regulations Issued: No
MN DEED Emergency Loan Program (SBEL)
- Lender/Application: Banks and other qualified lenders
- Interest Rates: 0%
- Term: Up to five years
- Lending Limit: $35,000
- Qualifying Business Size: MN restaurants, bars, fitness centers, country clubs, etc.
- Available Use of Funds: Operations
- Deferrals: Unknown
- Forgiveness Possible: Yes — up to 50%
- Uncertainty of Current Economic Conditions Necessary to Support the Ongoing Operations: No
- Prepayment Penalty: No
- Final Regulations Issued: No
Deferrals & Credits Through Families First Coronavirus Response Act & CARES Act
Also available are deferrals and credits through the Families First Coronavirus Response Act (FFCRA) and the CARES Act.
Families First Coronavirus Response Act (FFCRA)
- What It Is: COVID19 sick leave
- Requirement: Employee directly affected by COVID19 and requires sick leave to care for themselves or family
- Description: Beginning April 1 through December 31, 2020, provides up to two weeks paid leave. Limit $511 per employee per day
- Form of Payment: Tax credit on quarterly Form 941
- Qualifies for Advance Payment on Credits: Yes under file IRS Form 7200
- Regulations Final: IRS Notice 2020-21
CARES Act: Payroll Tax Deferrals
- What It Is: Payroll tax deferrals
- Requirement: None
- Description: Beginning April 1 through December 31, 2020, the employer's social security portion of FICA is deferred through end of 2020. 50% due 2021 and 50% due 2022
- Form of Payment: Deferral of payment with Form 941
- Qualifies for Advance Payment on Credits: Deferral of payment only
- Regulations Final: IRS Notice 2020-22
CARES Act: Employee Retention Tax Credit
- What It Is: Employee retention tax credit
- Requirement: Business that's been forced to fully or partially suspend operations or has a significant drop in revenues
- Description: If 100 EEs, credit of 50% of wages paid to employees. Limit on $10,000 of wages per EE. If over 100 EEs, 50% credit for wages paid to furloughed or reduced-hour employees
- Form of Payment: Tax credit on quarterly Form 941
- Qualifies for Advance Payment on Credits: Yes under file IRS Form 7200
- Regulations Final: IRS Notice 2020-22
Download: Deferrals and Credits for Businesses Amid COVID-19.
These are high level comparisons that should be used for informational purposes only. Please contact us to discuss your specific situation so you can be empowered to know you're making the best choice for you, your business and your family of employees.
We are your CPAs with Solutions. Reach out to us with questions.
