On April 24, Congress voted the Paycheck Protection Program and Health Care Enhancement Act into law. This new legislation added more critical funding to several existing programs that support small businesses created by the CARES Act.
Through the CARES Act and the new Paycheck Protection Program and Health Care Enhancement Act, there are now five ways for small businesses to apply for federal loans, grants, tax credits, or tax deferrals to support employees and survive the COVID-19 crisis.
1) Paycheck Protection Program (PPP): Short-Term, Forgivable Payroll Loan
The PPP is designed to help small businesses & non-profits maintain payroll in light of the COVID-19 pandemic. Eligible businesses who enroll in the program will receive a forgivable loan to use for payroll purposes, in addition to helping pay for utilities, rent, mortgage interest payments, and more.
As of April 16, nearly 70,000 loans had been approved for Illinois, totaling more than $15 billion. The average loan amount was $228,529.
PPP Application Information: PPP applications are to be submitted through participating lenders. You should first contact your primary lender, but if you need a lender or would like to see if your lender is participating, you can find a list here.
If you have already submitted your application with a lender: contact your lender ASAP to ensure that they have the documentation they need to process your application as soon as possible.
If you have applied for a PPP loan but have found your lender non-responsive: consider other avenues to ensure that your application has a great likelihood of being processed quickly and accepted. It is not uncommon for organizations to have multiple simultaneous PPP applications filed with different lenders. However, your organization may only receive one PPP loan.
Lenders Accepting New Customers: If you have not yet located a lender willing to take your application, our office has been informed about several lenders that are accepting applications from new customers. These include:
Paypal
TCF Bank
Kabbage
Devon Bank
Square
These are lenders that small businesses have indicated are or were receiving applications from new customers, but to be clear: this isn’t an endorsement of any of them. We encourage you to do your due diligence before entering into a relationship with any lender.
2) Economic Injury Disaster Loan (EIDL) Program: Long-term, Low-Interest Loan
These Small Business Administration (SBA) loans provide small businesses with long-term, low-interest loans (not forgivable like the PPP) to help them survive the COVID-19 crisis. Applicants can apply for both EIDL and PPP loans simultaneously, although the funds cannot be used for the same purpose.
As of April 24, over 1,200 loans have been processed for Illinois organizations, amounting to about $256 million.
EIDL Application Information: The SBA has established a streamlined online application process. You may also check on the status of your application by calling 800-659-2955.
3) Emergency Economic Injury Grants (EEIG): Short-Term, Pre-EIDL Loan
Businesses that need an infusion of capital in the short-term and are applying for a loan through the EIDL program also have the opportunity to apply for an Emergency Economic Injury Grant (EEIG). Accepted applicants can receive up to a $10,000 advance on their EIDL loan request quickly, while their EIDL application is being processed.
EEIG Application Information: This process can be started from the EIDL application, available here.
As of April 24, over 42,000 Illinois organizations had received an EEIG advance amounting to about $176 million.
4) Employee Retention Tax Credit
The CARES Act also created an Employee Retention Tax Credit, which helps employers retain their employees during the COVID-19 crisis. The Tax Credit is fully refundable for 50 percent of qualified wages (including qualified health plan expenses) paid between March 12, 2020 and January 1, 2021, up to $5,000 per employee. This credit is not available to employers receiving assistance via the Paycheck Protection Program. Information from the IRS on how to apply is available here.
5) Employer Payroll Tax Deferral
The CARES Act additionally allows employers to defer portions of certain payroll taxes through the end of 2020. These deferred amounts will be due in two installments: one at the end of 2021, the other at the end of 2022. Qualified deferrable taxes include the employer portion of FICA taxes and half of SECA taxes. Deferral is not available to employers receiving assistance via the Paycheck Protection Program. Information from the IRS is available here.