COVID-19 Economic Relief Resources

Baltimore County Small Business COVID-19 Emergency Relief Grant Program

Starting on May 11, DEWD will begin taking applications for the Small Business Emergency Relief Grants Program. This program will award grants of up to $15,000 each to more than 650 Baltimore County-based small businesses on a first-come, first-served basis.

Visit the program link for eligibility details and the required application documents. Find answers to frequently asked questions.

FEDERAL RESOURCES

CARES Act:  Payroll Protection Program (Funds exhausted)
Small Business Administration Economic Injury Disaster Loan (Funds Exhausted)
Employee Retention Tax Credit
Small Business Tax Relief Program
Employee Retention Tax Credit Guide

4/16/20 UPDATE The small business rescue fund set up by Congress has exhausted its $350 billion funding capacity.

Without additional funding, banks and the Small Business Administration will be unable to approve more of the “Paycheck Protection Program” loans designed to avert layoffs during the coronavirus pandemic, which can be forgiven if businesses agree to maintain their payrolls.

Lawmakers are continuing to negotiate how to replenish the funds but an imminent deal isn’t expected.

Next week, starting on Monday, April 20, the Mainstreet Lending Program will be presented from the federal government as the PPP and BSA EIDL two programs have disbursed their funds.

First: What should I do to secure my practice financially?

Remember, this relief funding and emergency resources are supplemental. Before applying for grants and loans (1) talk to your creditors for deferral, abatement or waiver of expenses; (2) call your business insurance provider to ask if your policy includes business interruption coverage.  Most insurance policies have exemptions for acts of God, but it is still worth a call. (3) Each practice should consult their tax attorney/accountant.

On March 27, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides economic relief for businesses experiencing a temporary revenue loss due to COVID-19. Congress released 2 trillion dollars in aid with CARES as way to help businesses. The flagship program of CARES is the Paycheck Protection Program (PPP), which can be used to cover payroll costs to your business. Unlike the Economic Injury Relief Loan (discussed below), which is funded through the Small Business Administration (SBA), the PPP is applied for from an SBA approved bank. Friday, April 3 banks will be ready to start accepting applications for the PPP.

Another important aspect of the CARES Act for small businesses is that it expands eligibility for the SBA’s EIDLs. In early March, the SBA’s disaster loan program was extended to all small businesses affected by COVID-19, but the CARES Act opens this program up further and makes it easier to apply.

CARES Act: Payment Protection Program
Payroll Protection Program This is the flagship program of CARES Act and can be used to cover payroll costs to your business. Unlike the SBA EIDL, which is funded through the Small Business Administration (SBA), the PPP is applied for from an SBA approved lender. Here is a breakdown of the program by the US Chamber of Commerce.  

How do I apply?

PPP Application.  Lenders won’t be ready until Monday, April 6. The Treasury Department has released more details on the loans here.   You will need to apply for the loan at an SBA approved lender.  Please contact your lender before applying to determine if they are prepared to accept your application.

When can I apply for a PPP loan?

Friday, April 3, 2020.  April 10 for independent contractors. Right now the legislation is being communicated to lenders, so for full details contact an approved bank on Monday.

Who is eligible for the CARES Act Payment Protection Program?

The Paycheck Protection Program offers loans for small businesses with fewer than 500 employees, select types of businesses with fewer than 1,500 employees, 501(c)(3) non-profits with fewer than 500 workers and some 501(c)(19) veteran organizations. Additionally, the self-employed, sole proprietors, and freelance and gig economy workers are also eligible to apply. Businesses, even without a personal guarantee or collateral, can get a loan as long as they were operational on February 15, 2020.

What does the PPP loan cover?

PPP covers payroll costs defined as salaries, wages, commissions, employee benefits, like vacation, family and sick leave, group health insurance, and rent, utilities, compensation for the owner (core business costs).  They cover payroll costs and employee benefits, mortgage interest incurred before February 15, 2020, rent and utilities under lease agreements in force before February 15, 2020 and utilities for which the service began before February 2020.

What are the terms of the PPP loan?

The maximum loan amount under the Paycheck Protection Act is $10 million, with an interest rate no higher than .5%. No personal guarantee or collateral is required for the loan. The lenders are expected to defer fees, principal and interest for no less than six months, but no more than one year.  You have a maximum of 10 years to repay the loan.  The PPP application calculates of one month’s payroll times 2.5 (250%) minus help you have received grants from other programs. The loan can compensate up to $100,000 per employee.  For example, if an employee earns $150,000 the loan will only pay up to $100,000 of compensation.

Must Employees be kept on the Payroll? — or Rehire Quickly

Yes, employees must be kept on payroll or be rehired quickly.  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.

Can this loan be forgiven?

This is a big bonus for applying to the PPP.  Yes, small businesses that take out these loans can get some or all of their loans forgiven. Generally speaking, as long as employers continue paying employees at normal levels during the eight weeks following the origination of the loan, then the amount they spent on payroll costs (excluding costs for any compensation above $100,000 annually), mortgage interest, rent payments and utility payments can be combined and that portion of the loan will be forgiven.

Any cost to date of the original loan for eight weeks is 100% forgivable. For example, if you determine your payroll is $20,000 per month, using the program’s calculations you receive 250% of your monthly payroll, you would receive a $50,000 loan. But due to loan forgiveness, you would owe nothing on the first 8 weeks of the loan and only owe the final $10,000 along with a .5% interest rate.

You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.

Does forgivable mean taxable?

Loan forgiveness is not taxable.

What do I use to calculate my monthly pay roll?

You will need to use your most recent business or personal taxes. Make sure you record every payroll expense. If you have not completed your 2019 taxes (due July 15, 2020), not a problem, then use your 2018 taxes.  For sole proprietorships, you will use your Form 1040 Schedule C. Take your annual payroll cost and divide by 12 months, multiply by 2.5 (250%).  This is the amount for which you can apply.

What if I don’t have perfect credit – should I apply to these resources?

You are recommended to apply no matter your credit rating. An advantage of the Paycheck Protection Program (PPP) is it gives full discretion to the bank, which means no Small Business Administration credit review, drag or oversight. Both SBA EIDL and PPP can be denied on account of your credit, but the threshold is very reasonable.  Don’t let it be a barrier to applying.

SBA Economic Injury Disaster Loan (EIDL)

 Small Business Administration Economic Injury Disaster Fund This is a step-by-step breakdown of how to apply for an Economic Injury Disaster Loan from the Small Business Administration. Please note: Unlike the Payroll Protection Program (PPP) Loan, this loan need to be repaid.  Emergency Economic Injury Grant (EEIG), part of the SBA EIDL gives a $10,000 grant advance and does not need to be paid back.

This is a step-by-step breakdown of how to apply for an Economic Injury Disaster Loan from the Small Business Administration. Please note: Unlike the Payroll Protection Loan, this loan needs to be repaid. Here is the direct link to begin the loan application process.

What are the EIDL terms?

Eligible businesses many borrow up to 2 million can be borrowed at a 3.75% interest rate.  The amount you can borrow is determined by business type, size and financial resources. Terms of up to 30 years are available with the first payment due 12 months after funds are issued.

How can I use the EIDL funds?

These are working capital loans that may be used to pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. However, you can’t use the funds for expansions or making up for lost sales. There is a question whether you can role the portion of this loan into the PPP loan which is forgivable.  We will update membership when we answer this question.

Can I roll over my EIDL into the PPP?

Yes, you can roll this SBA EIDL into the Payment Protection Program, which has a considerably better interest rate .5%, as opposed to 3.25%.

What are the EIDL collateral requirements?

Economic Injury Disaster Loan of over $25,000 require collateral. The SBA takes real estate as collateral when it is available. The SBA will not decline a loan for lack of collateral, but requires borrowers to pledge what is available. Given the severity of the COVID-19 pandemic and its economic impacts, the SBA will make reasonable efforts to work with applicants toward a favorable decision.

When will I hear about my Economic Injury Disaster Loan approval?

Usually within 24 hours you will receive confirmation. The online platform is performing very well, and no processing problems have happened. SBA plans for one week for a full response.

How to Apply for an SBA Economic Injury Disaster Loan and Grant.

This is a step-by-step breakdown of how to apply for an Economic Injury Disaster Loan from the Small Business Administration. Please note: Unlike the Payroll Protection Program (PPP) Loan, this loan need to be repaid. A breakdown of both loans can be seen here in this Emergency Small Business Loan Guide from the U.S. Chamber of Commerce.

I applied, but did NOT receive the EEIG $10,000 grant? 

If you already applied for the EIDL and were not asked for consideration in the Emergency Economic Injury Grant (EEIG), part of the EIDLs which gives a $10,000 advance, unfortunately, you must reapply for your EIDLs.  However, do so because the EEIG is a $10,000 is a grant.  Even if you did not qualify for the EIDL you can still receive the EEIG’s $10,000.

The SBA has updated the website and streamlined the process to help.  Now you just have to check the box requesting the $10,000 EEIG advance. However, since we are talking about free money expect money to be reduced. That means you can’t double dip on the free money.

Can I receive both the EEIG $10,000 grant and a PPP loan?

Yes, but the $10,000 that you receive for the grant will be deducted from your PPP loan forgiveness.

Step 1: Visit the SBA disaster loan website.

Here is the direct link to begin the loan application process.

Note: Before entering any personal information, be sure you are on the real Small Business Association site at SBA.gov.

Step 2: Verify eligibility.

The SBA is relying on businesses to self-certify eligibility. This is a two-part verification process:

• The first part certifies that your business falls within the parameters of the Economic Injury Disaster Loan (EIDL) Program. Choose the one description that fits your business.
• In the second part, you must certify that your business is not engaged in certain disqualifying activities. Review and check each of the boxes before continuing.

Then click the “Continue” button to be taken to the online application.

Step 3: Provide business information.

To complete this step of the online application, you will need several pieces of information pertaining to your business handy, including:

• The legal and trade names of your business.
• Your Federal EIN number or Social Security number.
• Gross revenue and cost of goods sold for the 12 months leading up to January 31, 2020.
• The date your business was founded.
• The number of employees.

Employee Retention Tax Credit

The employee retention tax credit is a broad based refundable tax credit designed to encourage employers to keep employees on their payroll. The credit is 50% of up to $10,000 in wages paid by an employer whose business is fully or partially suspended because of COVID-19 or whose gross receipts decline by more than 50%. Businesses cannot participate in both the employee retention tax credit program and Paycheck Protection Program. 

FAQs: Employee Retention Credit under the CARES Act

Small Business Debt Relief Program

Information on this program is still forthcoming from the SBA
This program will provide immediate relief to small businesses with non-disaster SBA loans, in particular 7(a), 504, and microloans. The SBA will cover all loan payments on these SBA loans, including principal, interest, and fees, for six months. The SBA will also pay the principal and interest of new 7(a) loans issued prior to September 27, 2020. Learn more about the SBA Debt Relief program.

Employee Retention Tax Credit Guide

The CARES Act also created a new employee retention tax credit—that does not have size restrictions—for employers who are closed, partially closed, or experiencing significant revenue losses as a result of the coronavirus pandemic. Click here to view a new guide to help businesses check eligibility, calculate their credit, and understand which employees count toward eligibility, among other information. Employers who receive a Paycheck Protection Program (PPP) loan are not eligible for a tax credit.

STATE RESOURCES

Check the Status of Your Maryland COVID-19 Loan/Grant Application

Check the status of a submitted application for the Maryland Small Business COVID-19 Emergency Relief Loan/Grant you can now by signing up at your Maryland OneStop account. Use the same email address from your original application. Your application will be linked up to your account and you will be notified.

NOTE: As of 5 p.m. on April 6, Commerce is no longer accepting new applications for its Maryland COVID-19 Relief Grant and Loan Programs. All applications that have been submitted are currently being reviewed in the order received. If you have already started an application in the program system, it must be completed and submitted by 5 p.m. on April 7, 2020 in order to be considered. 

Maryland Small Business COVID-19 Emergency Relief Grant Fund This COVID-19 Emergency Relief $50M Grant Fund offers working capital to assist Maryland small businesses and nonprofits with disrupted operations due to COVID-19 with fewer than 50 employees. (Application Suspended)

Maryland Small Business COVID-19 Emergency Relief Loan Fund This $75 million loan fund offers loans up to $50,000 (not to exceed 3 month of cash operating expense) to Maryland businesses affected by COVID-19 with fewer than 50 employees. (Application Suspended)