Two programs through the U.S. Small Business Administration are available to help Marion County businesses make it through hardships caused by the coronavirus shutdowns.
The Payroll Protection Program is intended to be a grant to keep employees on payrolls, and Economic Injury Disaster Loans can provide funds to continue paying bills while the economy is down.
The “social distancing” strategy of stopping spread of the virus has brought U.S. commerce to a standstill, with many businesses in Columbia closing or greatly restricting access to the public. The federal and state governments have been developing a response to try and recover from a likely recession.
Lori Watts, head of the Marion County Development Partnership, provided a synopsis of relief measures available.
Watts said in an email that the recovery from the virus is expected to come in two phases:
Phase 1: Short term during the peak of the crisis from March to May.
Watts said businesses are likely to need short-term, smaller amounts of money to “get through” the next two months and that many banks are offering deferments of payments or “interest-only” payment programs.
“Some landlords are offering rent/lease deferment, and utility companies are not interrupting service for non-payment on a temporary basis,” Watts said. “Business owners can talk with their bank loan officer, landlords and utility provider to determine ways to navigate this.”
Mississippi Power also said it has up to $200,000 for small businesses with 50 employees or less through a new program called “Project Share” distributed through Catholic Charities. Any Mississippi Power customer with a demonstrated financial need may be eligible to apply by calling (855) 847-0555.
Phase 2: Will cover roughly May through October while affected businesses will be attempting to stabilize their situation to launch full recovery, Watts said.
During this phase, the two main relief measures will be operational. Here's a summary of both:
SBA Emergency Economic Injury Disaster Loans
Max loan amount: $2 million
What can the money be used for? Working capital (pay fixed, debts, payroll, accounts payable and other bills)
What is the interest rate? 3.75% fixed
Loan term: Maximum 30 years, based on ability to pay
What are the repayment terms? Payments are deferred for 11 months.
What are the fees? No fees paid by the borrower or the bank
What is the collateral? Required if loan is more than $25,000
Who is eligible? Essentially any small business or nonprofit with less than 500 employees, including sole proprietors and independent contractors
How do you apply? Directly online at disasterloan.sba.gov.
What is needed? A comprehensive loan request packet must be provided with historical financial information and projections. Information is needed from financial statements, most recent federal income tax returns, schedule of liabilities and personal financial statement. Businesses must also show the ability to repay the loan.
The MCDP will put needed forms on its resource page (mcdp.info/together) so businesses can print/view them to understand what they will need for the application, but they have to be submitted through the online application process online.
Watts said an attractive feature of the EIDL is a provision allowing applicants to request a grant advance of up to $10,000 on the loan to provide immediate relief toward paid sick leave, payroll and other debt requirements. This is requested at the time of the EIDL application. This $10,000 is a grant and is not added back into the principal amount of the loan.
Payroll Protection Program
The application process opened Friday for small businesses and begins April 10 for independent contractors and the self employed.
This program provides cashflow assistance through 100% federally guaranteed loans to small employers who maintain their payroll during the emergency. The portion of the loans used for payroll costs, interest on mortgage, rent and utilities will be forgiven under certain conditions.
Time frame: Covers business operations from Feb. 15 to June 30, and loans must be originated by June 30.
Max loan amount: Either $10 million or 2.5 times the average monthly payroll, whichever is less
Interest rate: 0.5%
What is the loan term? Two years for any amount not forgiven
What are the repayment terms? Payment deferments of principal and interest available for the first six months
What are the fees? No fees paid by borrower or bank
What is the collateral? No collateral required
Who is eligible? Essentially any small business or nonprofit with less than 500 employees, including sole proprietors and independent contractors
Where can you get a PPP loan? The money will go through SBA-participating banks. All the banks in Columbia (Trustmark, Citizens, First Southern, State Bank (now BankPlus) and Regions) are all participating. SBA-participating credit unions can also provide the loans.
Information needed for this loan: Basic applicant information provided on a simple two-page application at your bank. This includes determination whether the borrower was in operation before Feb. 15, 2020, and had employees for whom they paid salaries and payroll taxes or paid independent contractors.
Watt said it is recommended for applicants to assemble the following information to make application to either of these loans simpler:
1. First two quarters of 2019 federal filing
2. First two quarters of 2019 state payroll filing
3. Latest federal business tax return
4. Utility bill through February 2020
Applicants should also call their lender prior to making application to receive advice and information directly from them.
Watts said the final phase of recovery will include rebuilding with the likelihood that additional relief and assistance will be needed. Reports from the National Development Center express the expectation that additional relief measures will be passed in Congress as time advances, she said.
“We recommend that businesses apply as soon as they possibly can because the available funds will likely not cover all the requests,” Watts said. “Feel free to call us with any questions. If we don’t have the answer, we will do all we can to find the answer for you. We are here to assist our local businesses in this recovery.” n
