President Donald Trump on March 27, 2020 signed into law a historic $2 trillion stimulus, with $377 billion for small and medium businesses.
The legislation offers the prospect of federal loan—which in some cases can be forgiven—as well as grants and debt relief. The bill could help many private companies keep their workers paid, their finances afloat, and their operations either running or ready to get back up to speed when needed.
What does this mean for you as the owner or leader of a privately held business?
Here is our take on the highlights.
The bill allocates $350 billion for loans to help small employers (500 employees or fewer) pay their employees. If a company that accepts such a loan maintains its payroll unchanged, the loan will be forgiven—making it essentially a grant.
Even if you’ve already had to lay off workers, you still may qualify: this provision is retroactive to February 15, 2020, to help bring laid-off workers back onto payrolls.
Under certain conditions, these loans may also be used (and forgiven) for interest on mortgage obligations, rent, and utilities.
If you think that COVID-19 has hit your business like a hurricane, the federal government may agree: The legislation allows companies to apply for Small Business Administration (SBA)’s Economic Injury Disaster Loans (EIDL) in order to help qualifying companies overcome COVID-19’s economic impact. The total allocated for this program is $10 billion.
Some companies may even qualify for an EIDL emergency grant—an advance of $10,000 within three days.
Owe money to the SBA right now? You may be about to receive six months relief. The SBA now has $17 billion to pay all principal, interest and fees on existing SBA loan products to qualifying small businesses impacted by COVID-19. The loan products include 7(a), Community Advantage, 504 and Microloan programs.
Bottom line: The new legislation can help private companies answer some of their most urgent questions: how to maintain liquidity, how to avoid breaching debt covenants, and how to do the right thing by their employees.
Taking full advantage of its opportunities will require fully understanding what the law offers, what it requires, and how to act swiftly and effectively to maximize its benefits.