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US Small Business Resource Center

The Foundation believes small business owners and start-up entrepreneurs fuel the engine of local and national economies all over the world. We are deeply committed to supporting these businesses during this uncertain time with clear, tangible steps to access capital and additional resources.  
Our commercial and philanthropic efforts focused on these communities include our dedication to our urban investments, whose work spans comprehensive community and economic development.  Now more than ever we are marshalling our resources, our insights, and our global network to support small businesses struggling with the economic fallout of COVID-19. 
The August Foundation is committed to delivering information on initiatives to help small businesses and communities around the world:   In addition to our own efforts, we have compiled information and resources to help small businesses navigate accessing capital and support during this unprecedented time. 
Note: The below is not comprehensive for all 50 states and local jurisdictions and is intended as a guide. You should consult federal and local community resources for the most up-to-date information. 


Paycheck Protection Loans

The content in this section was last updated on April 20, 2020. 
Please note: The initial $349 billion that was allocated under the CARES Act to PPP loans has been exhausted. As of April 20, 2020, we expect that the U.S. Congress will approve additional funding in the coming days 
for PPP loans. We expect more updates in the coming days and will share information as it becomes available. 

Understanding the CARES Act Paycheck Protection Program Loans 
For small businesses, the cornerstone of the Coronavirus Aid, Relief, and Economic Security  (CARES) Act is the $349 billion Paycheck Protection Program, an emergency lending facility to provide cash-flow assistance to businesses negatively impacted by the COVID-19 pandemic. Federal resources also include Economic Injury Disaster Loans and Emergency EIDL Grants. 
Note: Paycheck Protection Program loans became available on April 3, 2020 for small businesses and sole proprietors and became available on April 10, 2020 for self-employed individuals and independent contractors. Please note: As of April 20, 2020, the initial $349 billion that was allocated under the CARES Act to PPP loans has been exhausted.

What is the Paycheck Protection Program? 
The Paycheck Protection Program provides small businesses with loans that may be partially or fully forgiven and are 100% federally guaranteed (SBA PPP Loans) This program leverages the existing (SBA) 7(a) lending program and current 7(a) lenders, while vastly increasing the available amount, improving loan terms, streamlining borrower requirements, and providing for the expansion of eligible lenders for SBA PPP Loans Please note, PPP Loans are available on a first come, first served basis.

Who is Eligible?
For-profit businesses, not-for-profit organizations, veterans organizations, and Tribal business concerns that meet the following 3 criteria: 
Are either    

a) Entities with fewer than 500 employees or small entities as defined by the SBA; certain industries may have higher maximum employee levels OR

b) sole proprietors, independent contractors and self-employed individuals 
Were in operation on February 15, 2020 
Will certify, among other things, that the uncertainty of current economic conditions makes the loan necessary to support ongoing operations With the exception of businesses with a NAICS industry code beginning with 72 (primarily hospitality and food service industries), certain franchise businesses, and businesses that have received investment from an SBIC, a business’s employee count will include the employees of its affiliates (as defined by the SBA). Please refer to the guidance under “What are the Affiliation Restrictions?” below for more information about the Affiliate rules.

What Size is the Loan? 
The maximum loan size is the lesser of (i) $10 million or (ii) 2.5x average total monthly “payroll costs” 
If the business has already received an SBA Economic Injury Disaster Loan (EIDL) and chooses to refinance that loan with an SBA PPP Loan, the outstanding EIDL loan amount can be added to the loan amount, subject to the $10 million cap 

How are “Payroll Costs” Defined and Calculated? 
Payroll costs for businesses include salaries, wages, cash tips, payments for vacation, parental, family, medical, or sick leave, and group health care benefits, as well as certain other employment-related expenses Payroll costs for sole proprietors and independent contractors includes wages and net earnings from self-employment 
Compensation for an individual employee, sole proprietor or independent contractor above $100,000 annually (pro-rated for the period) is excluded The average payroll will be calculated over (i) the year prior to the loan origination, (ii) for seasonal employers, the period between February 15, 2019 through June 30, 2019 or, at the election of the borrower, March 1, 2019 through June 30, 2019, or (iii) the period between January 1, 2020 and February 29, 2020 for businesses not in operation during the period between February 15, 2019 and June 30, 2019

What Can the SBA PPP Loan Be Used For? 

Borrowers will be required to make a good faith certification that the loan proceeds will be used for: 
● At least 75% of the loan size must be used on payroll costs

● Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums

● Employee compensation

● Business related mortgage interest payments (not principal), lease payments, utility payments

● Interest on any other business debt obligations that were incurred prior to February 15, 2020


How Much of the SBA PPP Loan Can be Forgiven? 
● Amounts spent during the 8 week period after the loan is disbursed on payroll costs, business mortgage interest, rent, and utilities

● Forgiveness will be reduced pro-rata for workforce reductions (this does not include employees who are re-hired)

● Forgiveness will be reduced if salaries/wages are reduced by more than 25% (excluding reductions for salary and wage amounts over $100,000)

● At least 75% of the forgiveness amount must be for payroll costs

● Forgiveness cannot exceed the original loan amount 

What If I Have Already Reduced My Workforce? 
The Paycheck Protection Program is retroactive to February 15, 2020 This means employers can use the funds to re-hire employees and still benefit from loan forgiveness


What Are Other Key Terms of the Loan? 
● Interest rate: 1% annually

● Loan term: 2 years

● No fees for borrowers

● All borrowers will receive at least 6 months of interest and principal payment deferment

● DOES NOT require companies to have been in operation for one year

● DOES NOT require a personal guarantee or collateral

● DOES NOT explicitly require companies to be profitable


What Is the Timing?

● Lenders were permitted to begin processing loans for small businesses and sole proprietorships on April 3, 2020. Lenders were permitted to begin processing loans for self-employed individuals and independent contractors on April 10, 2020

● Eligible lenders must participate within this timeframe

● Loans can be made until June 30, 2020

● See sample borrower application and borrower factsheet, both released by Treasury on March 31, 2020


Which Lenders Can Make SBA PPP Loans? 
● Eligible lenders currently include existing SBA 7(a) program lenders, federally insured depository institutions, federally insured credit unions, and Farm Credit System institutions

● All institutions that are eligible may choose to not participate

● Additional lenders with sufficient qualifications are expected to be added on a rolling basis by SBA and the US Department of the Treasury


What are the Affiliate Restrictions? 
● In general, if a private equity or venture capital firm is deemed to “control” your business, you may not be eligible for PPP Loans

● If your business is deemed to be “controlled” by another firm, you must aggregate the number of employees of your business and the controlling firm, along with the employees of any other businesses affiliated with the controlling firm

● If the aggregate number of employees exceeds 500 (or such higher size standard the SBA has set for businesses in the relevant industry), your small business likely cannot take out a loan under the PPP unless an exemption applies

● For example: If you have 300 employees and a venture capital firm “controls” your business, and that venture capital firm controls another business with 300 employees, your aggregate employee count is 600. You would likely be ineligible for a PPP Loan without an exemption


What Businesses are Exempt from the Affiliate Rules? 
If your business qualifies as any of the below, you may be exempt, meaning you can apply for a loan under the PPP as a small business even if you have more than 500 employees when counted with your affiliate(s), including any controlling PE or VC firm Affiliate rule exemptions:

● U.S. businesses in the hospitality and restaurant industries that are assigned a North American Industry Classification System (NAICS) code beginning with 72

● U.S. businesses that are SBA recognized franchises

● Eligible franchises can be found through the ​SBA’s Franchise Directory

● U.S. businesses that receive financial assistance from an SBIC

● Faith-based organizations that are affiliated with another organization if the relationship is based on a religious teaching or belief or otherwise constitutes a part of the exercise of religion ● Additional details regarding exemptions to the affiliate rules can be found in the Treasury Department’s ​Frequently Asked Questions regarding the PPP (last updated on April 13, 2020)


How is Control Determined?
Control is determined by four tests: 
1. Ownership, where an affiliate owns 50% of the voting equity

 2. Affiliation arising under stock options, convertible securities, and agreements to merge

 3. Management, where the CEO or President of the business also controls the management of one or more other concerns. Note, this can also apply where a single individual or entity that controls the Board of Directors or management of one business also controls the Board of Directors or management of one of more other businesses 
4. Identity of interest, where close relatives have identical or substantially identical business or economic interests 
Note on minority investors: Even if a minority investor has a right to vote against an action, this does not necessarily mean they are an affiliate. If the individual investor has the ability unilaterally to block the action, standing alone, that would constitute control and result in affiliation. However, the mere fact that a minority investor has the right to vote against an action should not result in control, and thus affiliation.


If my Business is Ineligible for PPP Due to the Affiliate Rules, What Other Options Do I Have? 
You may be eligible for an EIDL (details below) among other options that may be announced in the coming days and weeks. You should consult your attorney regarding controls analysis and other options 

Economic Injury Disaster Loans and Emergency Economic Injury Grants

The content in this section was last updated on April 20, 2020. 
Emergency Injury Disaster Loans (“EIDLs”) and Emergency Economic Injury Grants (“EIDL Grants”) provide cash assistance for businesses suffering substantial economic injury due to COVID-19 across all 50 states, Washington D.C. and the territories. 
Please note: As of April 20, 2020, we expect that the U.S. Congress will approve additional funding in the coming days for EIDLs. We expect more updates in the coming days and will share information as it becomes available.

Who Is Eligible?
Certain businesses that were in operation on January 31, 2020 that have suffered economic injury due to COVID 19 including: 
● Entities with 500 or fewer employees, including businesses, cooperatives, ESOPs, tribal small business concerns, and small agricultural cooperatives

● Businesses with more than 500 employees that meet the applicable size standard for SBA based on industry

● Sole proprietorships and Independent contractors

● Private nonprofits (of any size)

● Note: For EIDLs, businesses with 500 or fewer employees do not require the affiliation analysis that may be required for certain businesses under the SBA PPP Loans

What Can an EIDL Be Used For? 
EIDLs are available to pay for expenses that could have been met had the COVID-19 pandemic not occurred, including: 
● Payroll costs including paid sick leave to employees

● Increased costs due to supply chain interruptions

● Rent or mortgage payments ● Obligations that cannot be met due to revenue losses

What are the Key Terms of the EIDL? 
● Up to $2 million loan amount

● Interest rate of 3.75% annually for small businesses and 2.75% annually for non-profits

● Up to 30-year loan term

● Requires personal guaranty for loan amounts above $200,000

● Submission of tax returns is not required

If I Apply For an EIDL, Can I Also Get an SBA PPP Loan? 
Businesses can apply for and receive both EIDLs and SBA PPP Loans but the loan proceeds cannot be used for the same purpose What This Means:  If you use EIDL proceeds to cover payroll for certain workers in April, you cannot use SBA PPP Loan proceeds for payroll for those same workers in April, although you could use SBA PPP Loan proceeds for payroll in March or for different workers in April

Key Things To Know About EIDL Loans 
Under the CARES Act, EIDL provisions have been expanded: 
● EIDLs can be approved by SBA based solely on an applicant’s credit score

● EIDLs of less than $200,000 can be approved without a personal guarantee

● SBA is not requiring real estate collateral and will take a general security interest in business property

● Businesses need not have been in business for the one-year period prior to the COVID-19 pandemic

● If you applied for an EIDL prior to the COVID-19 national emergency declaration, you may have been denied because your specific geography was not yet eligible. You can now re-apply for an EIDL.

What Is an EIDL Grant?
● An emergency $10,000 cash advance that may be requested during the EIDL application process that SBA will fund within three days of applying for the EIDL

● The EIDL Grant does not need to be repaid, even if the application for the EIDL is denied 
Note: If you obtain both an SBA PPP Loan and an EIDL Grant, the EIDL Grant will be reduced from the amount of forgiveness under the SBA PPP Loan

Who Is Eligible for an EIDL Grant?
Anyone who is eligible to apply for an EIDL, retroactive to January 31, 2020 to allow those who have already applied for EIDLs to also receive the EIDL Grant 

Where Do I Apply?
 ● SBA is currently accepting applications online. Click ​here​ to apply through December 31, 2020 ● SBA resource partners are available to help guide you through the EIDL application process. Find the nearest Small Business Development Center, Women’s Business Center, or SCORE mentorship chapter at ​


For Further Reading 
SBA Resource Guide - English

SBA Resource Guide - Spanish

● United States Senate Committee on Small Business and Entrepreneurship’s ​Guide to the CARES Act

For any specific questions about the CARES Act and how it may impact your business, we strongly encourage that you contact your legal counsel.

Additional Resources
Coronavirus Resources from Marsh and McLennan ​- A roundup of employer resources focused on addressing the implications of the health crisis on topics such as working practices, employee travel, and other policies

US Chamber Guidance​ - Resources from the U.S. Chamber to help equip small businesses with the most recent information to both help prevent virus spread and adapt businesses for near and long-term impacts

Department of Homeland Security​ - Resiliency resources for leaders in the business community, focused on topics such as staff preparedness as well as resilient systems and structures

The COVID-19 Security Resource Library​ – Compilation of tips and recommendations from National Cyber Security Alliance on ways to stay safe online, as well as how to avoid cyber threats and scams during this pandemic

The National Restaurant Association Restaurant Recovery Plan​ - A mobilization effort for the restaurant industry to support the National Restaurant Association restaurant recovery plan and confront the economic impact of the crisis

ICIC’s Small Business Resource Center​ - Webinars as well as national, local and financial resources for small business owners navigating the heath crisis

HelloAlice’s COVID19 Resource Center​ - Real-world funding, resources, and support for small business owners adapting to the impacts of coronavirus

The Helm’s Resources for Small Businesses​ - From how to access SBA Disaster Recovery Loans, to grants and relief packages, this guide is a frequently-updated list of everything women-led businesses will need to weather the impacts of coronavirus

McKinsey & Company’s COVID-19: Leading through the crisis - Insights on how organizations can respond and what happens next

Cooley Coronavirus Resources​ - Legal and business insights on the COVID-19 pandemic

Nav​ - FAQs About Cares Act Paycheck Protection Loans for Small Businesses

● Annuity's Guide to COVID-19 and Your Finances - What You Need to Know

Annuities and What They Are - The importance of annuities and their benefits


Tax: The federal tax return filing deadline is now July 15, 2020, and several states have extended the payment deadlines, so you should check with your state tax agency​ to find out if your business has more time to file or more time to pay state and local taxes this year as a result of COVID-19


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