Here’s one piece of good news in these unsettling times: the federal government has allocated substantial funds to help business owners get back on their feet. “Congress wants companies to stay in business and pay their employees, so our economy can bounce back,” said Joe Bischoff, Ph.D., the Society of American Florists’ senior lobbyist.
During the March 30 webinar, “Accessing Federal Aid,” Bischoff broke down the basics of loans for businesses made available through recent legislation. “More details will be coming,” he added. “We’re learning about this in real time.”
Presently, three COVID-19 emergency bills have been passed:
- $8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act (COVID Supplemental I)
- $100 Billion Families First Coronavirus Response Act (COVID Supplemental II)
- $2 trillion Coronavirus Aid, Relief and Economic Security Act (CARES, COVID Supplemental III)
The “Families First” Act focused on food, nutrition and unemployment; the other two offer assistance for businesses.
Bischoff recapped the key points from each of the loan programs:
COVID Supplemental I
Economic Injury Disaster Loan
- Available to small businesses, small agricultural cooperatives, small aquaculture producers and non-profit organizations
- Loans of up to $ 2 million.
- 75 percent interest rate and up to a 30-year term
Economic Injury Disaster Advance Loan
- Forgivable loan of up to $10,000
- Funds provided within three days of completing the application.
CARES/COVID Supplemental III
Paycheck Protection Program (PPP)
- Available to firms impacted by COVID-19 with up to 500 employees
- Small businesses, sole proprietors, independent contractors
- Waives upfront paperwork; borrowers make a good -faith statement and are presumed eligible
- Provided through 7(a) lenders
- Covers up to 2 ½ months of business expenses, calculated by choosing any eight-week period between February 15 and June 30.
- Up to $10 million; up to a 10-year term
- Forgiven if used for payroll, interest on debt, rent or utilities (forgivable amount reduced proportionately if workers are cut or pay is reduced).
- Interest on non-forgivable portion of loan capped at 4 percent.
- Payroll costs include: employee salaries (up to annual rate of pay of $100,000), hourly wages and cash tips, paid sick or medical leave, group health insurance premiums
“If you have already applied for a loan through COVID Supplemental I, it does not inhibit you from accessing the PPP,” Bischoff said. “It’s not double dipping. The first loan would simply be rolled into the second.”
The CARES/COVID Supplemental III bill also includes the Treasury Department’s Exchange Stabilization Fund for businesses with 500 to 10,000 employees that are domiciled in the U.S., with a majority of employees working stateside.
“There are fewer details on this program right now,” Bischoff said.
This loan’s duration would be as short as is practical, but no longer than five years. It limits executive compensation and requires the borrower to make a good-faith effort for the following stipulations:
- Funds would be used to retain at least 90 percent of the workforce, at full compensation and benefits until September 30.
- At least 90 percent of the workforce that existed on February 1 would be restored.
- Workers’ compensation and benefits would be restored within four months of the end of the public health emergency.
- No stock buy-back or dividends would be paid while the loan is outstanding.
- There will be no job outsourcing for at least two years after loan is repaid.
- Borrower won’t end collective bargaining agreements for at least two years after the loan is repaid.
- Borrower won’t block union organizing while the loan is outstanding.
The webinar concluded with a Q&A session, with many queries, such as how do employee commissions or holiday business affect business cost calculations, requiring further research.
“The folks on the Hill haven’t contemplated details that SAF members have brought up,” Bischoff said. “They’re writing legislation with a broad brush and allowing agencies to implement policies.”
But have faith that there is enough money to go around, Bischoff added.
“When it comes to making broad economic decisions — factoring things like the size of the economy, the perceived value of small businesses and their costs — there is pretty strong data out there,” he said. “The folks at the Congressional Research Service and others on the Hill have done their homework and know this is what was needed to fund these bills.”
SAF is developing a resource page with FAQs and links to loan-related resources in the coming days.
Katie Hendrick Vincent is the senior contributing writer and editor for the Society of American Florists.