Several state and federal assistance programs are in place that can help local small businesses that have been adversely affected by the coronavirus pandemic and related restrictions, Centre County Commissioner Mark Higgins said during a presentation at Tuesday’s board meeting.
Efforts to mitigate the spread of COVID-19 have included closing businesses deemed ‘non-life-sustaining,’ as well as restricting what others, like bars and restaurants, are able to offer. That has meant a loss of income and employee layoffs for many businesses.
Higgins said that while employees who are fired or laid off can typically collect unemployment benefits, small business owners and entrepreneurs are usually not eligible. But a provision of the federal stimulus bill will allow the self-employed to be eligible for four months of unemployment benefits, with rules expected to be released in the next two weeks.
Additionally, unemployment contributory businesses that are temporarily closed will be granted relief from charges.
‘Normally, if you have a lot of people who are unemployed, your unemployment insurance is going to go up,’ Higgins said. ‘But soon there’s going to be forms out there where you can state ‘My staff was unemployed due to COVID-19 related issues,’ and they will not increase your unemployment insurance in the future. Obviously for a small business that’s already not doing well, this would really hurt a couple years down the line.’
There are also multiple loan and grant programs available.
‘Almost all these programs are first-come, first-served. When the money runs out, the money runs out,’ Higgins said. ‘So you’re going to need to move quickly.’
The Pennsylvania Department of Community and Economic Development offers working capital loans, and through $61 million in funding authorized last week, the Pennsylvania Industrial Development Authority will make low- and no-interest loans available to small businesses.
The COVID-19 Working Capital Access Program will offer loans up to $100,000 for businesses with 100 or fewer employees.
Businesses must apply through their local Certified Economic Development Organizations, which in Centre County are the Moshannon Valley Economic Development Partnership in Philipsburg, or SEDA-COG, which serves an 11-county area.
Higgins said MVEDP has already processed at least six of the loans and SEDA-COG has done 19.
At the federal level, the Paycheck Protection Program is a $349 billion loan and loan forgiveness program being administered by the U.S. Small Business Administration and its network of approved lenders. The loans are generally available for businesses with 500 or fewer employees, including the self-employed and sole-proprietors.
Loans are based on a formula that is essentially 2.5 times a business’s average monthly payroll, Higgins said, and can be used for payroll costs, rent, mortgage interest and utilities. Importantly, if properly documented, businesses can be eligible for loan forgiveness after eight weeks.
For any portion of the loan that is not forgiven after the eight-week period, all payments would be deferred for six months, and possibly up to a year, Higgins said.
Businesses that have already laid off employees would have options for some loan forgiveness by hiring them back.
Details on lenders and processes for the Paycheck Protection Program are expected to be released by SBA this week.
Economic injury disaster loans are also available through the SBA to small businesses in every state. The loans, which cannot be used for the same expenses as the Paycheck Protection Program, have 30-year repayment terms and interest rates of 3.75-4.75 percent, Higgins said. In some circumstances, they may be eligible for forgiveness as well.
If approved for a relief loan, businesses may also immediately apply for an emergency economic injury grant of up to $10,000.
“You get that money pretty quickly and you can use it to pay for a broad variety of normal business expenses,’ Higgins said.
The latest program, the Federal Reserve’s Main Street Business Lending Program will use banks and credit unions to funnel financing to small and medium businesses to help them make payroll and stay afloat in the coming months, Higgins said.
The program will provide $454 billion in direct funding and will leverage as much as $4 trillion from local banks and credit unions, he added.
Rules and funding are expected to be available in April.
Employers can also defer payments of certain federal payroll taxes, with the deferred payments then due over the next two years. But, Higgins said, that option will not be available to businesses who use the Payroll Protection Program.
Higgins said businesses should also seek assistance directly from bankers, landlords, mortgage holders and suppliers where needed.
‘If we don’t work together, if we don’t cooperate to save our small businesses, many of them will be gone in a couple of months,’ he said.
