COVID Stimulus Primer: Understanding the Relief Packages
Katie Butler, Society of American Florists
A $2 trillion COVID stimulus package is now law—and it includes targeted relief for small businesses, and specific mention of relief for “specialty crops” in agriculture. SAF has been on the front lines on the Hill and with the USDA to advocate that SAF members in all industry segments can access the aid they need.
So far, there have been two small business loan programs created as a result of the COVID-19 Pandemic.
The first program was created through the passage of COVID legislation last week (COVID-I). That bill created a $1 billion fund to immediately assist small businesses hit hard by the current economic shutdown. Unlike traditional Small Business Administration (SBA) funding mechanisms, this program is being administered directly by the SBA and is currently accepting applications (see more below).
The second program was created through today’s passage of the COVID stimulus package. That bill created the Paycheck Protection Program and the Economic Injury Disaster Loan (EIDL) program. These programs will be administered more like traditional SBA programs, i.e. through third party, 7(a) lenders. The Paycheck Protection Program is intended to keep workers on small business payrolls through offering forgivable loans. The EIDL grant program offers small businesses a one-time $10,000 grant to cover costs in the short term.
Businesses can accept funds from both programs, but they must demonstrate the funds are being used for different purposes.
The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the coronavirus (COVID-19). Upon a request received from a state’s or territory’s governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan (EIDL) declaration.
- Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available statewide to small businesses and private, non-profit organizations to help alleviate economic injury caused by the coronavirus (COVID-19). This will apply to current and future disaster assistance declarations related to coronavirus.
- SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s governor to submit the request for Economic Injury Disaster Loan assistance.
- Once a declaration is made, the information on the application process for Economic Injury Disaster Loan assistance will be made available to affected small businesses within the state.
- SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
- These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses.
- SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
- SBA’s Economic Injury Disaster Loans are just one piece of the expanded focus of the federal government’s coordinated response, and the SBA is strongly committed to providing the most effective and customer-focused response possible.
- To apply for these loans, go to: https://disasterloan.sba.gov/.
- For questions, please contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800- 877-8339) or e-mail email@example.com.
The Paycheck Protection Program
Applies to you if:
- You were in business and employed fewer than the greater of 500 people or the SBA size standards in number of employees for your industry on February 15, 2020.
- You are a small business, nonprofit, veterans’ organization, tribal business, or are self-employed, an independent contractor or sole proprietor.
What it does:
- Allows you to apply for a 100% government backed, low interest SBA 7(a) loan up to $10 million. The loan amount will equal 250% of your average monthly payroll costs.
- The period covered for the debt forgiveness is from Feb. 15, 2020 until June 30, 2020.
- The 100% government backed loans and fee waivers will be authorized through Dec. 31, 2020.
- Allows you to use the loan to cover payroll costs, including salaries, paid sick and medical leave, insurance premiums, mortgage, rent and utility payments.
- Allows the loan to be forgiven in an amount equal to what you spent on payroll, rent and mortgage interest (on leases and mortgages in effect on February 15, 2020).
- Reduces the loan amount forgiven proportionately to the reduction in number of employees retained compared to last year and reduced by the reduction in pay of any employee greater than 25% compared to last year.
- To encourage you to rehire your laid-off employees, you will not be penalized for having a reduced payroll at the beginning of the period.
- Ensures that the loan forgiveness amount will not count as taxable income.
- Reduces the amount of loan forgiveness under the Paycheck Protection Program by the amount of your EIDL grant.
- Delegates authority to all current 7(a) lenders to determine your eligibility.
- Prevents you from accessing both this and an SBA disaster relief loan for the same purpose.
USDA Grower Aid
Today’s package also includes potential aid for domestic floriculture growers from the USDA. While many groups advocated for small business relief, SAF and the floral industry were among the most engaged and vocal, particularly among specialty crops, in support of USDA getting the necessary funds to help growers through this very challenging time. The language says:
“For an additional amount for the ‘‘Office of the Secretary’’, $9,500,000,000, to remain available until expended, to prevent, prepare for, and respond to coronavirus by providing support for agricultural producers impacted by coronavirus, including producers of specialty crops, producers that supply local food systems, including farmers markets, restaurants, and schools, and livestock producers, including dairy producers.”
“While there is still much work to be done, we believe USDA should use some of the funding to ensure that the domestic flower growers are able to bounce back after this crisis and remain vibrant,” says Bischoff.
SAF will conduct a survey to all grower members early next week in order to gather data necessary to show the impact that COVID-19 has had on their businesses. SAF will use the data to make the case to USDA that it should allocate funding to assist domestic flower growers.
SAF hosted a webinar on navigating federal aid options with SAF Senior Lobbyist Joe Bischoff. It's archived at COVID-19 Webinar Series: Accessing Federal Aid.