Frequently Asked Questions from Small Businesses
1. What is considered a small business? The Office of Advocacy defines a small business as an independent business having fewer than 500 employees.
2. What Businesses are Considered Essential? Essential Businesses include Grocery Stores, Hospitals/Clinics, Pharmacies, Utilities, Post Office, Take-Out Restaurants, Gas Stations, First Responders, Financial Institutions, and Child Care Services. Non-Essential Businesses include Retail Stores, Personal Care Services, Movie Theaters, Tattoo Parlors, Gyms, Entertainment Venues, Bars & Clubs, and Museums.
3. What loans are available to help small businesses due to COVID-19? The Economic Injury Disaster Loan from the Small Business Administration, and the Paycheck Protection Loan as part of the CARES Act.
4. How do I get these loans? Apply for the Economic Injury Disaster Loan directly from the SBA here. You should speak with your local bank about applying for the Paycheck Protection Loan. Although the Paycheck Protection Loans are government-backed, they will come from private banks.
6. How much can I borrow for these loans? A loan under the Economic Injury Disaster Loan can be up to $2 million working capital for up to a 30-year term at 3.75% (2.75% non-profits). The approved amount will vary for everyone. The Paycheck Protection Loan can be for 2.5 months of average payroll or $10 million — whichever is less.
8. Do I need to repay these loans? You must repay the Ecnonomic Injuury Disaster Loan; however, after one year, payments can be deferred. As for the Paycheck Protection Loan, all of some of the loan may be forgiven, or essentially, converted into a grant. The funds must be used for certain expenses, including, but not limited to, payroll. You must also continue to employ your workers in order for it to be forgiven. Be sure to speak with someone before applying to ensure you meet the requirements for forgiveness under the Paycheck Protection Loan.
10. What about the $10,000 emergency grant? The SBA is offering businesses a $10,000. Apply for this grant as part of the Economic Injury Disaster Loan process, as mentioned above.
11. Who is eligible for these relief options? Paycheck Protection Loans are available to 501(c)(3)s, self-employed, sole proprietors and independent contractors. TheEconomic Injury Disaster Loans are available to small businesses and non-profits with fewer than 500 employees, sole proprietors and independent contractors.
12. Can you apply for both loans? Yes.
13. What if I already fired or laid off my employees? Your Paycheck Protection can may be forgiven if you bring back employees and restore wages, generally, within 30 days and maintain them until June 30.