Most small businesses have suffered a great deal over the last few weeks as “social distance” became a thing and that turned into massive restrictions on movements and then the mandatory closing of small businesses all over the country.
Most small businesses do not have the cash flow options that large businesses do, so it can be difficult to hand on to employees while you are weathering the storm.
This is severe and disproportional damage.
However, there is a light at the end of the tunnel. The details are not yet clear, but the massive $2.5 trillion stimulus package just passed by Congress contains a massive loan package designed to ensure that small businesses can keep their employees on payroll.
According to the Wall Street Journal (a lot of disagreement in the media, but they all approximately agree), $349 Billion has been allocated for small businesses.
But here is the exciting part. All loan proceeds used to cover payroll expenses, rent, interest on mortgage obligations and utilities will be forgiven!
Of course, the devil is in the details. We do not yet know the requirements for such a loan or the documentation you will need to provide. It could be that you have to show that you lost a certain percentage of your business because of the COVID-19 quarantine. For those of us who do quarterly reporting, our losses may not show in the books until the end of June.
While I am personally opposed to having our government borrow money to send to its citizens, I am not crazy enough to turn away free money when it is offered. I have my accountant (Corey Miller of BMH accounting if you are in Florida…) watching for the offering and ready to explain the application process as it materializes. BF.news will do a followup story when we learn the rules.
But this is not all.
Here in Florida, the governor has activated the Florida Small Business Bridge loan, up to $50K in interest free loans for small businesses 2 to 100 employees. The deadline is May 8. Not free money, but certainly free liquidity. Nobody can complain about that, not even me.
I know about this one because my office landlord sent a mailer to its tenants. Apparently, they don’t want to have to carry anyone who is temporarily unable to pay their rent.
As for other states, programs are being added frequently. If you want to check programs in your state, you can find the websites of all of the state governors here.
The Small Business Administration is providing low-interest working capital loans of up to $2 million to small businesses affected by the coronavirus. These loans carry an interest rate of 3.75%. To apply online, check out this page.