While we wait for Congress to pass further legislation to aid businesses in light of the COVID-19 crisis, there is currently a US small Business Administration (“SBA”) program in place which may provide relief.
As a result of COVID-19, small businesses operating in areas of the country declared “disaster” areas, including the Commonwealth of Pennsylvania, the State of New Jersey, and numerous counties within the State of New York, may participate in the SBA Disaster Loan Assistance Program (specifically, economic injury loans). This program offers low-interest (not to exceed 4% per year) working capital loans, up to $2 million, to small businesses severely impacted by COVID-19 and suffering substantial economic injury, e.g. the business is unable to meet its obligations and pay its ordinary and necessary operating expenses. This loan is a last resort loan, meaning that the SBA must have determined that the small business is unable to obtain credit elsewhere.
For purposes of determining whether a company is a “small business” eligible for support from the SBA, a review and analysis of a business’s annual receipts and/or number of employees for that business’s industry must be conducted. The SBA maintains a website into which one may enter the NAICS number for its business to preliminarily determine whether it may qualify as a “small business.” This should be verified against SBA regulations (at 13 C.F.R. Part 121, Section 121.201).
In addition, the NJ legislature passed A-3845 / S-2284 last week. The bill authorizes the NJ Economic Development Authority (“NJEDA”) to make grants for, among other things, to provide working capital and meet payroll requirements, during periods of emergency declared by the Governor of the State of New Jersey (as is the case with respect to the current COVID-19 pandemic). The NJEDA’s website, which addresses questions regarding aid to businesses affected by COVID-19, advises to keep checking its website because the NJEDA is currently reviewing procedures and policies related to its support programs. It appears that the NJEDA is administering a survey to small-to-medium businesses to inform the development of new programs and initiatives to support organizations during this COVID-19 outbreak.
What the NJEDA has done so far is to waive the 80% project site requirements under the Business Employment Incentive Program, Business Retention and Relocation Assistance Grant Program, Urban Transit Hub Program, and the Grow New Jersey Program, which all require that the full-time employee spend at least 80% of his or her time at the job site. This waiver, however, is temporary and only to apply during the period in which a state of emergency is in effect. We are currently monitoring the NJEDA‘s response to the bill and will keep our clients informed.
New York City Grants and Loans
Further, New York City is in the beginning stages of launching a grant and loan program to address the economic pains experienced by small businesses as a result of COVID-19. Specifically, the City is considering providing relief for small businesses experiencing at least a 25% decrease in revenues due to COVID-19, and providing capital to ease payroll costs, support employee retention, and cover working capital expenses through these trying times.
On March 17, 2020, Facebook announced plans for a $100 million grant program for small businesses impacted by COVID-19. Facebook’s program aims to support rent, operations, communications, and other costs incurred by small businesses. As this has only recently been announced, we will be monitoring and posting further information regarding the terms of eligibility requirements.