What emergency loans and grants can California small businesses get during COVID-19?

Small businesses face particular risks and uncertainties due to COVID-19. With margins often thin, small businesses are at significant risk. Many small businesses do not have the reserves to survive in this kind of environment. Most commercial insurance policies exclude epidemics, making it unlikely that you will receive help from your insurer. However, you should still file a claim for business interruption losses anyway. Governments will likely factor in the volume of claims filed when deciding whether to provide relief. The problem is that the support packages that are announced take time to make their way to struggling businesses. You should act as soon as possible to protect your interests. States and the federal government are trying to offer support and relief to hard-hit businesses, including those in the service sector. It is far from an ideal scenario, but any assistance to small businesses is critical at this time. The new SBA Emergency Disaster Assistance Fund provides businesses that have been affected by the coronavirus with low-interest loans up to $2 million. The interest rates are 2.75% for nonprofits and 3.75% for for-profits. The repayment terms will be up to 30 years, depending on your ability to repay. The application is free. It does not affect your credit. You do not have to take the loan if your business is approved. You should apply even if you aren’t sure whether you will need the money, or how much you will need. Approval will probably take about three weeks. Right now, governors in California, Washington and some other states have made applications available. If the business was failing before COVID-19, it will likely not receive money. If you can receive help from conventional sources or have credit available elsewhere, you may not qualify. If your business has been seriously impacted by COVID-19, you should apply. Loans provide money to pay bills and keep the lights on in your business. But they must be repaid, with interest. A loan will provide you with extra time and cash flow to get on your feet when the crisis has abated. Paycheck Protection Program loans were authorized in the Coronavirus Aid, Relief, and Economic Security Act. The program helps small businesses retain employees and preserve the payroll, making them more likely to recover after COVID-19 has passed. The loans are expected to provide immediate cash flow, at favorable terms, for American small businesses. You can borrow up to $10 million. Qualifying businesses include those with up to 500 employees, with some exceptions. The loan proceeds can be used for payroll, to pay insurance premiums, rent, mortgage interest, or utilities. The amount forgiven is an amount equal to the sum of payroll expenses, rent, utilities, and group health coverage paid during the eight weeks after the loan was originated. The forgiven amount will be reduced if the employer reduced the number of employees during the same period, as compared to prior periods. You will need to document the amount of payroll and other expenses during the eight-week period. This amount will determine the amount of loan forgiveness. Know exactly who you’ve laid off, when they were laid off, and who you’ve kept. The lender receives 100% reimbursement from the Small Business Administration (SBA) for the amount the lender forgave. Try to get all necessary documents together to apply for the Paycheck Protection Program loans. Many banks and lenders are overwhelmed and difficult to contact. If you have a business relationship with a lender, make sure to reach out right away to see if they have put together a special response to address the crisis. Details of the program continue to evolve, so stay abreast of developments that could help your small business. Regulations implementing the programs are just being created and will almost certainly change as time goes by. At the state level, the California Capital Access Program (CalCAP) makes capital available to small businesses that may have difficulty getting financing from traditional sources. If your business received a small business loan from a financial institution, the financial institution is able to obtain up to 100% reimbursement for loan defaults if the small business defaults. Therefore, this provides security for the lender, so it is more likely to provide the loan. The California Small Business Disaster Relief Loan Guarantee Program allows partner Financial Development Corporations to provide state guarantees for loans of up to $1 million. The guarantee reimburses the lender up to 95% of the loan amount. Businesses with fewer than 750 employees will generally qualify. California’s Jump Start Loan Program has small loans available for small businesses that have been financially impacted by COVID-19. Businesses will be eligible for a loan of $500 up to $10,000. Applicants’ income cannot exceed the statewide average. The goal is to help the most vulnerable. The Governor’s Office of Business and Economic Development’s website lists resources and helps small businesses find the resources for which they qualify. Check back regularly to see if there are more resources to help you. The programs are moving quickly. There are many local loan programs available for small businesses. It is worth seeking out those that are available to your small business to supplement your other financial options.

In Sacramento, start with the city’s Coronavirus Resources website. The site has information on benefits and relief available to businesses and to employees. The city’s Small Business Assistance Fund offers interest-free loans of up to $25,000 each to small businesses. Repayment is deferred until the crisis ends. It is intended for retailers, restaurants, hospitality and child care businesses. The application period closed on March 20, and city officials hope to find more funds for more assistance. The Sacramento Regional Community Foundation activated a Regional Disaster Fund. Through grants, it will help nonprofits. The Sacramento Metro Chamber of Commerce’s Rapid Response page can help you with applications.

The City of San Diego set up a Small Business Relief Fund to help small businesses with zero-interest loans and grants. Eligible businesses must be in San Diego, and have 100 or fewer employees. About $6.1 million is available. Awards will range from $10,000 to $20,000. The city’s website and quick guide explain how the fund works.

In Los Angeles, the city’s micro-loan program offers loans of $5,000 to $20,000. Your business cannot have more than 100 employees, and funds must be used for working capital. Interest is at 0-3%, depending on term and deferral period. Details are on the Economic & Workforce Development Department website.

In San Francisco, the Coronavirus small business resource page from the city’s Office of Economic and Workforce Development lists the programs available. San Francisco officials are working with Main Street Launch to provide financing up to $250,000, at 3.5% to 7.75% interest. The city’s emergency relief fund provides grants up to $10,000, for small businesses with five employees or fewer. The city also put $1 million into the Northern California Grantmakers’ Arts Loan Fund for low-cost loans to small and midsize arts groups.

The governor’s office also publishes a COVID-19 Resources Map. Select your county to find the help that may be available to you. Help may include free consulting from regional financial development organizations. You can filter by industry focus or by support for minority-owned businesses. Be sure to do your research. Many resources may be available for your small business if you know where to look. This crisis is unprecedented. Local and national governments are scrambling to try to get assistance to the most vulnerable individuals and businesses. The sooner you begin the process of applying for the assistance for which you qualify, the better. Although loans may become available quickly, they could take time to deploy. You need to be prepared for significant delays. Take the time to get your business records in order, assemble the necessary documents, and submit your applications quickly. The impact of COVID-19 on the economy and on businesses continues to change daily. Time is of the essence. Start applying for funding now. Get in the queue for assistance.