Small businesses trying to get financial relief in the coronavirus crisis have a lot of options. Help is available from the feds, from the state, and from the local government. There’s tax relief and other kinds of financial help too. If you’re a small business in Los Angeles, you can get money from the feds (EIDL and PPP loans), the state of California (loan programs), the city of Los Angeles (microloans), the county (microloans), unemployment aid (business owners). And there are deadline extensions for tax filings.
Small Business Administration
Both the EIDL and PPP are programs of the Small Business Administration. You can apply for both. The EIDL provides low-interest loans to provide working capital to small businesses while bridging temporary loss of revenue. It’s economic life support for small businesses.
If your small business is hobbled by the coronavirus, take heart. Owners in every U.S. state and territory can apply for a loan now at sba.gov/funding-programs/disaster-assistance. More: SBA.gov/Disaster.
Here’s a summary of what it takes to qualify for the loan and what you get if you do. You must show loss from COVID-19. The maximum is $2 million. There’s no collateral for up to $25,000. The rate is 3.75% for business, 2.75% for nonprofits. Terms are up to 30 years.
You can use the EIDL for working capital, fixed debts, payroll, accounts payable, existing bills. You can’t use it for lost sales or profit or for expanding. Accepting the EIDL is optional. You can have an existing SBA loan. They will not consolidate the loans.
The CARES Act became law March 27, 2020. It created a $2 trillion stimulus fund. $349 billion of the Act keeps workers of small businesses employed. This is the SBA’s Paycheck Protection Program. The program is 100% federally guaranteed. The best part about it is that part of it can be forgiven. Meaning you don’t have to pay it back. That happens if you keep people on payroll and keep paying them.
Up to 8 weeks of payroll is forgivable, depending on staff you keep and how much you pay them. You can use it for payroll, rent, utilities, mortgage interest (not principal), pre-Feb 15 debt interest.
It’s not open yet, but soon the Small Business Administration will take your application for it. The banks will do the processing. The SBA has a list coming of lenders that will accept applications. You qualify if you have under 500 workers or meet SBA size standards. 501(c)(3)s qualify if they have under 500 workers.
You’re also eligible if you’re a sole proprietor, an independent contractor, or self-employed with an ongoing trade, or a tribal business, or a 501(c)(19) veterans group within SBA size standards.
When you count up your employees, some special rules apply. Hotels and restaurants have a limit of 500 workers per location.
Franchisees and firms backed by small business investment companies (SBICs) are exempt from affiliation rules.
All workers count, including part-time workers.
Loans to Small Businesses Hurt by COVID-19
California’s got programs to make loans or guarantees for your small business. The state created a loss reserve loan portfolio (CalCAP) to help small businesses (1-500 workers). It covers up to 100% of certain defaults. The max is $2.5M per borrower over three years. You enroll via lender. Email: CalCAP@treasurer.ca.gov.
Disaster areas qualify. The IBank Disaster Relief Loan Guarantee offers $20,000-$50,000 in working capital to firms hit by COVID-19 without PPP or EIDL.
IBank Jump Start Loans are for low-wealth entrepreneurs in disaster or emergency areas. It lends $500-$10,000. Apply directly with the participating lenders.
The Pacific Asian Consortium in Employment is the lender in the City of LA, the unincorporated parts of District One, and in South LA County. The Economic Development Collaborative (EDC) is the lender in Ventura and Santa Barbara. Questions go to IBank@IBank.ca.gov.
The City of Los Angeles and LA County also offer loans to small businesses hurt by COVID-19. Here’s how to get a small emergency microloan if you have a business in the City of LA that got hurt by the coronavirus. This is for companies in the city, with 100 or less workers, for profit or nonprofit, that are committed to staying open and retaining staff.
The loans range from $5,000-$20,000. Terms are 18 months to five years. The rate varies according to the term. You must have a City business tax registration certificate dated before March 1, 2020.
To qualify, you have to meet the city’s credit and cash flow standards for borrowers. There’s no minimum score. The principal owners need a history of good credit. Explain negative credit events. A bankruptcy or charge-off must be 12+ months old. Demonstrate how past profits will cover repayments. Explain the impact of COVID.
The rules include: your main location must be in a commercial building inside the LA city limits. (You can double check this with the city’s zoning tool.) Collateral is case by case. It requires a 20%+ owner guarantee. A co-signer can help.
The LA Department of Economic and Workforce Development has the full details. Another source is LACDA Transit Oriented Communities Small Business Recovery Loans, paid for by LA Metro.
LA County businesses located within 1/4 mile of a major transit stop might qualify for up to $20,000 to cover operating costs. If your address qualifies, the LA County Development Authority can lend you the money. You’ll find an eligibility checker on the website. Applications were taken from June 4 to June 11, 2020. Go to TOCloans.lacda.org.
One more program is for people like you who don’t usually qualify for unemployment insurance from the state. If you are self-employed or work on contract or don’t have a long job history, usually you can’t get any help from state UI. But you can get Pandemic Unemployment Assistance if you’ve lost significant work because of the pandemic.
You should make sure to have these documents:
- Proof of citizenship.
- Your work history over the last 18 months.
- Contact information for your most recent employer.
- Any federal papers, or military papers if you were in the service.
Apply for it online. That’s the fastest way. You can also apply by phone, mail or fax. See the official PUA page and the FAQ page.
Filing and Payment Extensions
Both state and federal tax-filing and tax-paying deadlines that were between March 15 and June 15, 2020 have been moved to July 15. This also applies to partnerships, LLCs, S and C corporations and quarterly estimated payments.
The California Department of Tax and Fee Administration allows filing and payment extensions. It also offers interest and penalty relief. The Franchise Tax Board publishes updates on COVID-19.
If you’re struggling, you can ask the state for up to 60 days more to file state payroll reports and pay state payroll taxes. There’s no penalty. There’s no interest. You must send a written request explaining how COVID impacted your business within 60 days of the due date.
About Delancey Street
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