By Mark Pierce, Esq.
The COVID-19 pandemic created not only a health crisis but an economic crisis. The economic disruption that resulted from the pandemic has impacted both individuals and businesses, especially small businesses. In response to the hardships linked to COVID-19, the CARES Act was signed into law in March 2020 with the goal of providing billions of dollars in relief for both workers and small-business owners. Throughout the COVID-19 pandemic and in the face of the economic crisis, COVID-19 business resources have been created to help entrepreneurs understand the different programs available to them, and some COVID-19 resources for business owners continue to be available.
The Paycheck Protection Program (PPP) was a small-business loan program designed to assist businesses and their employees amid the economic disruption of COVID-19. Business resources like this loan program were designed to serve as an incentive for business owners to keep their employees on the payroll. The Paycheck Protection Program closed on May 31, 2021, and the SBA is not currently accepting applications. Existing borrowers may be eligible for loan forgiveness.
Economic Injury Disaster loans (EIDLs) provided economic relief for nonprofit organizations and small businesses that experienced a loss of revenue due to the pandemic. These loans helped organizations meet their obligations and pay their expenses that otherwise would have been paid if the pandemic had not happened. Businesses could use the funds to cover normal operating expenses and as working capital for their business operations. Interest accrued with these loans, but payments were deferred for one year. Non-COVID EIDL relief loans continue to be available to qualifying organizations and small businesses.
Small Business Administration Express Bridge loans (EBLs) are designed to meet the needs of small businesses that already have a business relationship with an SBA Express lender. These bridge loans make it possible for small-business owners to access as much as $25,000. Business owners can use the funds to make up for a temporary loss of income due to declared disasters, including the COVID-19 pandemic. These bridge loans are also useful for business owners applying for Economic Injury Disaster loans because the bridge loans can provide fast access to funds.
Small Business Administration Debt Relief involves the SBA paying six months' worth of principal, interest, and fees that business owners owe on current microloans in regular servicing status and microloans that were disbursed before Sept. 27, 2020. This debt relief won't cover Paycheck Protection Program (PPP) loans or Economic Injury Disaster (EIDLs) loans. Small-business owners don't have to apply for this debt relief; the SBA provides it automatically for loans that are not currently in deferment as well as loans that are currently being deferred.