Relief options for small businesses discussed

Fifth District U.S. Rep. Denver Riggleman, R-Nelson, reads a proposed coronavirus response package.

By Brandon Martin

Fifth District U.S. Rep. Denver Riggleman, R-Nelson, and Virginia Small Business Administration (SBA) Director Carl Knoblock, held a telephone town hall on April 8 to answer questions regarding federal assistance to small businesses as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Of the provisions in CARES, RIggleman and Knoblock highlighted the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) Emergency Advance.

The PPP can provide up to $10 million in assistance to all for-profit businesses, sole proprietors, independent contractors, 501(c)(3) non-profit organizations and 501(c)(19) veterans organizations with fewer than 500 employees, according to Riggleman.

To be eligible for a loan, the company must have been in business before Feb. 15.

Up to 100 percent of the loan can be forgiven if funds are used to cover payroll costs, utilities and interest rates on rent or mortgages. Due to an expected high volume of applications, Knoblock said that 75 percent of the forgiven amount must go to payroll which includes salary, benefits and even commissions and tips capped at $100,000 for each employee.

“It’s really designed to be an incentive for employers to keep workers on their payroll during this difficult time,” he said.

The amount of forgiveness depends on employers maintaining or quickly rehiring employees for eight weeks. During this time, if employees begin to be laid off or wages are cut, then forgiveness will be reduced.

Riggleman said that no collateral or personal guarantees are required. He added that any amount of the loan that isn’t forgiven will have a one percent interest rate on a two-year fixed income.

“Another good thing about it is that no payments on the loan are required for six months,” he said.

If the borrower has ever taken a loan from the SBA that subsequently caused a loss to the government, is currently delinquent, or resulted in default, they will be excluded from the program according to the Treasury Department’s application form. The application also excludes businesses in which any 20 percent owner is an individual who is currently subject to criminal charges, or who has previously been convicted or otherwise punished for a crime against a minor.

Knoblock said that businesses should have the following information available when applying: business Taxpayer Identification Number, average monthly payroll, number of jobs supported by the company and how specifically the loan money will be used. He said the employer will have to provide ongoing employee numbers and payroll costs.

According to the SBA website, lenders could begin processing applications on April 3 and the program will be in effect until June 30.

Local lenders in the SBA network are: American National Bank and Trust Company, 201 E Main St; HomeTrust Bank, 8 Lester St; Truist Bank, 1 Ellsworth St; Truliant Federal Credit Union, 135 E Market St; SunTrust, 250 Commonwealth Blvd; National Counseling Group, 730 E Church St; and American National Bank and Trust Company, 900 Liberty St.

In addition to the PPP, Riggleman said that small businesses should look into getting an EIDL as well.

The EIDL can provide up to six months in operating costs not to exceed $2 million, according to the SBA.

Of the amount borrowed, the advance of $10,000 will automatically be forgiven, Riggleman said.

“If you need an EIDL more than $10,000, then $10,000 will be waived and you’d only be required to pay the leftover amount,” Knoblock added.

Knoblock also said that the PPP and EIDL were designed to be stacked together. For example, he said that a business could use an EIDL to pay for rent and use the 75 percent of PPP for payroll and the other 25 percent of PPP for utilities.

The EIDL is available to small businesses with less than 500 employees, including sole proprietorships, independent contractors and self-employed persons. Private non-profit organizations and 501(c)(19) veterans organizations affected by COVID-19 are also eligible.

Riggleman said that farms could also get credit from loans available under a Limited Liability Company.

The Economic Injury Disaster Loan advance funds will be made available within days of a successful application.

Two other options, not discussed during the town hall, are also available through the SBA–Express Bridge Loans and Debt Relief.

The SBA Express Bridge Loan is available to small businesses that have a current business relationship with an Express Lender and can provide up to $25,000 quickly.

The SBA website said that the loan is designed to “bridge the gap” until EIDLs can be dispersed. The loan will be paid in full or in part from funds received from the EIDL loan.

SBA Debt Relief is the final form of assistance through the CARES Act.

The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for up to six months. This will apply to new 7(a), 504 and microloans issued prior to Sept. 27, 2020.

For more information on relief options under the SBA, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options.

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