Federal Assistance for Small Businesses During Coronavirus | Congressman Lee Zeldin

Federal Assistance for Small Businesses During Coronavirus

Rep. Zeldin recently hosted a Small Business Telephone Town Hall with the Small Business Administration and local small businesses to discuss federal assistance available as of April 7, 2020.

Paycheck Protection Program

The CARES Act provides up to $349 billion to create a new loan product within the Small Business Administration 7(a) Loan Program. 

Both existing SBA lenders and new lenders brought into the program with the assistance of the Department of Treasury will be able to offer these loans to eligible small businesses. 

Loans are subject to a $10 million cap and can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount. 

The new loan program will be available retroactive from Feb. 15, 2020.

All loans under this program will have the following identical features:

  • Interest rate of 1%

  • Maturity of 2 years

  • Loan payments deferred for 6 months

  • 100% guarantee by SBA

  • No prepayment penalties or fees

  • No collateral

  • No personal guarantee requirement

  • No borrower or lender fees payable to SBA

This loan can be used for: 

  • Payroll costs, including benefits  

  • Interest on mortgage obligations, incurred before February 15, 2020  

  • Rent, under lease agreements in force before February 15, 2020 

  • Utilities, for which service began before February 15, 2020 


Loan Forgiveness Under the Paycheck Protection Program 

The loan forgiveness tool allows businesses that maintain payroll continuity from February 15, 2020 to June 30, 2020 as defined by headcount, to request forgiveness on a Paycheck Protection loan used on payroll costs, mortgage interest, rent and utility pay over an 8-week period. 

The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25% of their prior year compensation.


Applying for Paycheck Protection Program

Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses.

Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses..  

You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. 

Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. 

To apply for a Paycheck Protection Program Loan, you will need to fill out the application here.


Paycheck Protection Program FAQs

Q: Do I qualify for the Paycheck Protection Program? 

A: Businesses, 501(c)(3)s, and 501(c)(19)s (veterans’ organizations) with less than 500 employees will be eligible for this loan. Additionally, sole proprietors, independent contractors and self-employed individuals will also be eligible. Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. If your franchisor appears in the SBA’s National Franchise Directory, assistance will extend down to the franchise of the store or location level. In addition, if you are a restaurant, hotel, or a business that falls within the North American Industry Classification System (NAICS) code 72, “Accommodation and Food Services,” and each of your locations has 500 employees or fewer, you are eligible.

Q: Are nonprofits, churches, Chambers of Commerce and physician practices eligible? 

A: Nonprofits and churches designated as a 501(c)(3) may participate in the Paycheck Protection Program. Physician practices are eligible, regardless of how they are structured. Unfortunately, most trade organizations and Chambers of Commerce are organized as 501(c)(6)s and are therefore not eligible to participate in the program. 

Q: Can I receive both an Economic Injury Disaster Loan and a Paycheck Protection loan? 

A: Businesses will be able to receive both as long as they go towards different things. For example, a business can receive an Economic Injury Disaster Loan for working capital and a Paycheck Protection loan for payroll assistance.

Q: What counts as payroll costs? 

A: Payroll costs include:  

  • Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee) 

  • Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit  

  • State and local taxes assessed on compensation

  • For a sole proprietor or independent contractor: wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

Q: How much of my loan will be forgiven? 

A: 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 utility 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. You will also owe money if you do not maintain your staff and payroll:  

  • Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.  

  • Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.  

  • Rehiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020. 

Q: How can I request loan forgiveness? 

A: You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

Q: Do I need to pledge any collateral for these loans? 

A: No. No collateral is required. 

Q: Do I need to personally guarantee this loan? 

A: No. There is no personal guarantee requirement.

Economic Injury Disaster Loans (Not Currently Accepting New Applications)

On March 19, 2020, the United States Small Business Administration (SBA) issued an emergency declaration making Economic Injury Disaster Loans available to small businesses and private, non-profit organizations in the State of New York, including Suffolk County. 

Economic Injury Disaster Loans provide small businesses with working capital loans of up to $2 million to help overcome the temporary loss of revenue. 

The loans may be used to pay fixed debts, payroll, accounts payable, or other bills that can’t be paid because of the COVID-19 outbreak. 

The interest rate is 3.75% for small businesses without credit available elsewhere, and 2.75% for non-profit organizations

The maximum term is 30 years.


Economic Injury Disaster Loan FAQs

Q: Do I qualify for an Economic Injury Disaster Loan?

A: Small businesses, small agricultural cooperative and most private nonprofit organizations qualify for an Economic Injury Disaster Loan. 

Q: What are the credit requirements? 

A: Acceptable credit history, proven ability to repay the loan, collateral for loans over $25,000. 

Q: Does the SBA require collateral? 

A: Economic Injury Disaster Loans 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. 

Q: How long will it take me to receive approval?

A: Once a borrower submits an application, approval timelines depend on volume. Typical timeline for approval is 2-3 weeks and disbursement can take up to 5 days. Borrowers are assigned individual loan officers for servicing of the loan. 

Q: I have an existing SBA loan. Do I still qualify for a disaster loan?

A: Applicants can have an existing SBA loan or other SBA loan and still qualify for this disaster loan. Loans cannot be consolidated.

Q: Where can I find more information? 

A: For additional information, you can contact the SBA Disaster Assistance customer service center, by calling 1-800-659-2955 or emailing disastercustomerservice@sba.gov.   


For more information visit SBA.gov/coronavirus.