Small Business Assistance Overview:
Small businesses and workers have been hit especially hard by COVID-19. Forced closures and supply chain disruptions - combined with the realities of limited access to capital and lower cash reserves - have made it extremely tough for local stores, restaurants, and organizations to make payroll and keep up with mortgage or rent obligations.
Small businesses are not only the backbone of our economy, but they also provide jobs that support residents and families across Arkansas. As we fight this public health crisis together, federal, state, and local representatives have taken action to aid businesses and workers during this unprecedented time.
Paycheck Protection Program
Under the CARES Act, which was recently passed by Congress and signed into law by President Trump, a “Paycheck Protection Program” (PPP) for small employers, self-employed individuals, and workers was created. The program, which will be administered through the U.S. Small Business Administration (SBA), will provide 8 weeks of cash-flow assistance through 100 percent federally guaranteed loans to small employers, including farmers and ranchers, who maintain their payroll during this emergency.
If the employer maintains payroll for 8 weeks, the portion of the loans used for covered payroll costs, interest on mortgage obligations, rent, and utilities will be forgiven - allowing workers to remain employed, providing assistance to small businesses, and helping our economy to recover quickly from this crisis. This proposal will be retroactive to February 15, 2020, to help bring workers who may have already been laid off back onto payrolls.
In-depth guidance from U.S. Treasury here, details of the PPP Interim Final Rule (which includes loan rate details) here, and House Small Business Committee Guide on the PPP here.
Who is eligible?
- Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries.
Are agricultural producers, farmers, and ranchers eligible for PPP loans?
- Agricultural producers, farmers, and ranchers with 500 or fewer employees whose principal place of residence is in the United States are eligible. Farms are eligible if: (i) the farm has 500 or less employees, OR (ii) it fits within the revenue-based sized standard, which is on average annual receipts of $1M.
- Additionally, farms can qualify for PPP if it meets SBA’s “alternative size standard.” The “alternative size standard” is currently: (1) a maximum net worth of the business not more than $15 million, AND (2) the average net income Federal income taxes of the business for the two full fiscal years before the date of the application be not more than $5 million.
- USDA coronavirus resources here.
Where can you get this loan?
- Any existing SBA lenders and any lenders that are brought into the program through the Treasury Department.
- You should talk to your preferred financial lender to see if they qualify.
When can I apply?
- Starting April 3, 2020, small businesses and sole proprietorships can apply. Starting April 10, 2020, independent contractors and self-employed individuals can apply.
What can you use the loan amount for?
- Payroll costs, group health care benefits, employee salaries, interest on any mortgage obligation, rent, utilities, and any other debt obligations which occurred before Feb. 15, 2020.
How much can you borrow?
- The maximum amount is the lesser of $10 million or 2.5 times the average monthly payroll based on last year’s payroll.
How long will it take to receive the money?
- The SBA has authorized lenders to process, close, and service loans without SBA approval, giving you the means to invest in your business immediately.
What if you can’t pay it back?
- First, all payments on principal, interest, and fees will be automatically deferred for six months.
- Second, for businesses that retain their staff for eight weeks, the loan amount used for payroll costs will be forgiven.
Can the entire loan be forgiven?
- Yes, if the entirety is used to cover payroll costs, mortgage interest, rent, and utilities during the first 8 weeks
Additional Guidance on CARES Act Provisions:
SBA Disaster Assistance
The U.S. Small Business Administration is also offering low-interest federal disaster loans to Arkansas small businesses impacted by the COVID-19 crisis. The assistance will provide working capital to help with operating expenses, including rent, utilities, and existing debt payments. You can apply for an Economic Injury Disaster Loan (EIDL) by clicking here or contacting the SBA’s Arkansas office by calling (501) 324-7279.
Economic Injury Disaster Loan Details:
- Working capital loans available for impacted businesses up to $2 million (unsecured loans up to $25,000 available).
- 3.75% interest rates for small businesses/2.75% interest rate for non-profits.
- Terms up to 30 years.
- Emergency $10K grants can be made within 3 days of your EIDL application to help your business weather the storm – you simply need to apply for the grant at the same same you apply for the loan.
- First payment can be deferred for 1 year (interest starts accruing on fund disbursement date).
Documents Needed to Apply:
- Tax Information Authorization (IRS Form 4506T) for the applicant, principals, and affiliates
- Complete copies of the most recent Federal Income Tax Return
- Schedule of Liabilities (SBA Form 2202)
- Personal Financial Statement (SBA Form 413)
Once you apply, you will receive an email confirmation, which will state that your application has been submitted. Following that notification, you will then receive a message once your application is under review. During the review process, you will be contacted by an SBA representative and should have monthly expenses and financial projections prepared.
If I get an EIDL and/or an Emergency Economic Injury Grant, can I get a PPP loan?
- Whether you’ve already received an EIDL unrelated to COVID-19 or you receive a COVID-19 related EIDL and/or Emergency Grant between January 31, 2020 and June 30, 2020, you may also apply for a PPP loan. If you ultimately receive a PPP loan or refinance an EIDL into a PPP loan, any advance amount received under the Emergency Economic Injury Grant Program would be subtracted from the amount forgiven in the PPP. However, you cannot use your EIDL for the same purpose as your PPP loan. For example, if you use your EIDL to cover payroll for certain workers in April, you cannot use PPP for payroll for those same workers in April, although you could use it for payroll in March or for different workers in April.
Additional EIDL Application Help:
Other Resources of Note:
SBA Express Lending
Express Bridge Loan Pilot Program allows small businesses that currently have a business relationship with an SBA Express Lender to access up to $25,000 with less paperwork. These loans can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. They can be used as a term loan or 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.
U.S. Chamber of Commerce
The U.S. Chamber of Commerce has developed a resource page for small businesses to help provide information on alternative funding options and other ways to navigate the many challenges posed by this pandemic. Click the following link for more information: https://www.uschamber.com/co/
Arkansas Quick Action Loan Program
Governor Asa Hutchinson directed the establishment of a loan program to provide assistance to businesses affected by the COVID-19 outbreak. Program overview here.
- Eligible companies may apply for a loan or loan guarantee of up to $250,000.
- The Quick Action Closing Fund allocation will prioritize small to medium-sized companies that are in the supply chain of essential goods and services (including healthcare, food manufacturing, logistics).
- The allocation from the Attorney General will support small businesses.
- The program includes both loan guarantees and direct lending to businesses.
Community Development Block Grant (CDBG)
- Up to $12 million in CDBG assistance will be made available for COVID-19 relief and recovery.
- This money will be used to provide grants to eligible local governments, which will then provide direct economic assistance in the form of loans to impacted companies and grants to clinics, hospitals and other non-profits who are working hard to provide care in rural Arkansas and to vulnerable populations.
- AEDC is undertaking necessary regulatory steps required by the federal government to implement this assistance.
Additional State Resources and Information: