Small Businesses and COVID-19: Navigating the Uncertainty

small business resources.jpg
small business resources.jpg

At a federal, state, and local level, the responses to helping small businesses weather these tough times have been swift.  But with the rapidity in which resources are being made available, it can be tough to navigate eligibility and recognize which options will be the most beneficial depending on the need.  RSG has been tracking the evolving climate of responses to the economic turbulence currently being felt by small businesses effected by COVID-19, and the tough times that lie ahead.  We have compiled a list of current resources that small businesses may find provide an option for their needs.

Federal Response – The U.S. Small Business Administration has designated a number of states within the country, including California, as eligible for small businesses to apply for loans through the Economic Injury Disaster Loan Program.  The program makes funding available to small businesses and private, non-profit organizations who have been economically injured as a result of COVID-19.

In a response to the effects of suffering a temporary loss of revenue, these loans are designed to help aid in paying fixed debts, payroll, accounts payable, and, other bills that are no longer able to be paid due to the impact of COVID-19.  The interest rate is 3.75% for small businesses while the interest rate for non-profits is 2.75%.  The loans are offered with long-term repayments, helping to keep them affordable, with a maximum repayment term of 30 years.  Specific loan terms are determined on a case by case basis, taking into account the borrower’s situation and ability to repay.  You can apply online or complete a paper application and submit it, identifying the reason for assistance as economic injury. For more information on this resource, visit the SBA website here.

Additionally, the federal income tax filing and payment deadlines for individuals and businesses has been extended to July 15, 2020.

State Response – The National Governors Association website offers the governors’ websites for all states throughout the country, with California’s found here.  State responses may vary a bit, with California offering the following assistance:

  • CA Infrastructure and Economic Development Bank (IBank)IBank is a unit within the CA Governor’s Office of Business and Economic Development, that offers loan programs for small businesses (1 to 750 employees).  Through the Disaster Relief Loan Guarantee Program (DRLGP) and Small Business Loan Guarantee Program, IBank in partnership with Financial Development Corporations will help small business borrowers who are in need of term loans or lines of credit for working capital, secure a 95% guarantee on a bank loan, with amounts up to $1 million.  IBank also offers loans from $500 to $10,000 through the Jump Start Loan Program, providing this funding to low-income small businesses in low-wealth communities operating in a declared disaster and emergency area.  For more information on these programs, visit California’s Small Business Finance Center website here.

  • California Capital Access Program (CalCAP) – CalCAP helps communities by providing financing to small businesses that create jobs and improve the economy.  This program encourages banks and other financial institutions to provide loans to small businesses that experience difficulty in obtaining financing. Loans can be used for start-up, expansion, and working capital with loans available up to $5 million.  When a small business has a loan enrolled in the CalCAP Loan Loss Reserve Program, it may provide more favorable loan terms from a lender given the programs provisions.  For more information on this funding, visit the California State Treasurer’s Office Website here.

  • California Department of Tax and Fee Administration (CDTFA) – Governor Newsom has issued an Executive Order in response to COVID-19 that provides CDTFA  the authority to provide assistance to individuals and businesses who have been impacted through their compliance with a state or local public health official’s order or recommendation of social distancing measures related to COVID-19. Individuals and businesses could receive assistance that includes receiving extensions for filing tax returns and making payments, relief from interest and penalties, and filing a claim for refund.  To learn more, visit the California Departments Tax and Fee Administration website here.

Local Response – Various cities are responding to COVID-19 by setting up financial relief funds, programs, and, practices to help mitigate the impact on small businesses within their jurisdictions.  Some of these efforts include:

  • San Francisco COVID-19 Small Business Resiliency Fund – This fund was created to provide assistance to businesses with 1 to 5 employees who require emergency funding to help cover things like rent and payroll.  To learn more about this funding opportunity, visit the San Francisco Office of Economic and Workforce Development’s website here.

  • City of Los Angeles Small Business Emergency Microloan ProgramThis program provides Los Angeles businesses and microenterprises, who are deemed responsible for providing low-income jobs, with a microloan from $5,000 to $20,000. Loans that have repayment terms of six months to one year will have an interest rate of 0% while five-year loans will have an interest rate of 3% to 5%.  To learn more about this program, visit the City of Los Angeles’ Economic and Workforce Development Department Website here.

  • Additionally, cities and counties including Los Angeles, San Francisco, Pasadena and Santa Monica have established moratoriums on evictions of small and medium sized businesses whose revenue has been impacted by COVID-19.