How to Apply for Federal Small Business Assistance

By Gail Doby, ASID
CVO and CO-Founder of Gail Doby Coaching & Consulting

There’s been some confusion as to what, how and when designers can apply for assistance offered through the recently enacted CARES federal COVID economic relief bill. Here is some basic information to help you get started. Also, download a copy of The Small Business Owner’s Guide to the CARES Act, which contains more detailed information and links to applications forms and instructions for how to apply online.

CARES offers small businesses, sole proprietorships, independent contractors, and some other entities whose businesses have been negatively affected by the Coronavirus health emergency two types of financial assistance, the Paycheck Protection Program (PPP) to help cover payroll and some other expenses and Economic Injury Disaster Loans (EIDL) grants to cover a number of business expenses, including payroll and operating expenses. You can apply for either or both programs, but only once for each. The deadline for applications is June 30, 2020.

The PPP provides any eligible business a loan of 2.5 times the average monthly payroll costs incurred between February 15 to June 15, 2019, up to $10 million. Payroll costs include compensation (capped at $100,000 per employee); vacation, sick / medical leave and personal / family leave; group health insurance premiums; and state payroll taxes. The loan will be forgiven if used to payroll costs, mortgage interest, rent, and utilities payments for a period of up to eight weeks after receiving the loan, including re-hiring staff who have been furloughed or laid-off since February 15. You have up to two years to repay any of the balance of the loan that does not qualify for forgiveness.

The EIDL provides eligible businesses with low-interest loans (1% APR) of up to $2 million to cover payroll and operating expenses, including debts, rent and mortgage. The loan will need to be repaid in full. In addition, when applying for the EIDL, you can request an emergency grant of up to $10,000, which does not need to be repaid. Be aware that if you apply for both programs, you can only use one to cover payroll costs, which will affect how much you will need to repay.

Small businesses and sole proprietorships began submitting applications as of April 3. Independent contractors and self-employed individuals are asked to wait until April 10 in order to give those with more employees a head start. If you currently or previously have received a loan from a local bank that is working the Small Business Administration, that will facilitate your application.

In addition to completing the short loan application form, you will need to provide a 2019 payroll schedule by employee, a copy of the 2019 IRS Form 940/941/944, the most recent tax return filed for the business, and a valid ID. Applications rejected for being incomplete or containing errors will need to be resubmitted as a new application, furthering delays.

Finally, be prepared to be patient. Completing the application process can take an hour or more, assuming all your documentation is in order. At present, banks and the online application sites are having difficulty handling the demand, so if you are able to wait a bit, the process may be smoother in another week or so. It may take up to several weeks before you receive the funds once your application has been approved.

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