The federal government’s $2 trillion economic relief plan passed last month offers help for small businesses affected by the coronavirus pandemic. Provisions include cash grants, low-interest loans and payments to offset payroll costs for businesses that retain workers or rehire those they have laid off, and enhancements to unemployment insurance and paid leave.  However, confusion regarding the different types of relief, how to properly apply for it and what to do if you are approved have become serious issues facing small businesses who need the relief the most.

The New York Times has compiled explanations and answers to Frequently Asked Questions about these programs to help relieve some of the confusion and guide business owners, employees, and contractors seeking help.

The article, F.A.Q. on Coronavirus Relief for Small Businesses, Freelancers and More does not require a paid subscription to read.

Here are some highlights of the article:

Who is eligible for relief?

Businesses and nonprofit organizations with fewer than 500 workers. Independent contractors (1099) and freelancers also may be eligible.

What help is being offered?

There are two main federal aid programs, both managed by the Small Business Administration.

The Paycheck Protection Program is a forgivable loan intended to pay for eight weeks of a business’s payroll costs, so the company can retain workers or hire back those it has already laid off.  The CARES Act greatly expanded the separate Economic Injury Disaster Loan Program (“EIDL”) with $10 billion of additional funding for the SBA.  The PPP provisions of the CARES Act were further interpreted by the SBA in two interim final rules issued on April 2, 2020 and April 3, 2020, and Frequently Asked Questions issued on April 6, 2020 and updated through April 8, 2020.  In conjunction with the issuance of the Affiliation Rule, the SBA also issued a two-page explanation.

The Economic Injury Disaster Loan Program also offers low-interest loans to cover most business expenses. A portion of these loans may be forgiven.

Other FAQs:

  • How Much Can I Borrow?
  • What if I Already Laid Off My Workers?
  • How Much Hardship Do I Have to Have to Apply?
  • What Documents Do I Need to Apply?
  • How Does Loan Forgiveness Work?

If your banker is not participating in these programs, the Small Business Administration (SBA) offers a search tool to help you find nearby lenders: https://www.sba.gov/paycheckprotection/find

Resource: The New York Times, FAQ on Coronavirus Relief for Small Businesses, Freelancers and More, April 9, 2020.