California’s Governor Gavin Newsom is offering resources for small businesses in the state who have lost work due to the coronavirus pandemic. Any small business impacted by COVID-19 can apply for a loan from the federal government up to $10 million on a first-come, first-serve basis.
The Governor also announced that the state has allocated $50 million to the California Infrastructure and Economic Development Bank for loan guarantees for small businesses who may not qualify for the federal funds. This includes low wealth and undocumented immigrant communities. Small businesses will also get a 90-day extension for paying sales tax thanks to an executive order the Governor signed.
But that’s not all. The Governor also launched a new platform connecting unemployed California workers with over 70,000 job opportunities in critical industries throughout the state. Workers impacted by the COVID-19 pandemic will also benefit from a $17.8 million initiative.
“The COVID-19 pandemic is having cascading effects for millions of California families and small businesses,” said Governor Gavin Newsom. “Through no fault of their own, more than a million Californians have lost a job and countless more are seeing their businesses fail. California will emerge from this crisis stronger than before, and until then, the state will work overtime with the federal government and private sector to get families the help they need.”
So how do you even get the funds? How do you know if you qualify? There are a lot of different resources available for small businesses right now due to the COVID-19 pandemic. With a variety of custom offices available, we at TailoredSpace are always talking with local businesses about their individual situations. If you’re a small business owner in California, here’s what you need to know to get some help during the coronavirus pandemic.
US Small Business Association Loan Process
If you missed the federal government’s first-come first-serve loan, there’s other options available.
Apply for Loan
You can apply for the loan at disasterloan.sba.gov/ela. As a small business, you can borrow up to $2 million for Economic Injury from the SBA. What is economic injury? That means your business can no longer meet its obligation or pay its operating expenses. The interest rate on EIDLs will not exceed 4% per year. Your ability to repay the loan determines your repayment term.
Loan Processing Decision Made
Once you’ve applied for the loan, the SBA will then review your credit before conducting an inspection to verify your losses. Your eligibility will be determined by a loan officer, who will then work with you to get all the information they need. Their goal is to approve applications between two and three weeks.
Loan Closed and Funds Disbursed
The SBA will then prepare your loan document to be signed. Once it’s signed, you will receive the loans within five days.
What is the Required Documentation for SBA Loan?
With the help of your Loan Officer and Case Manager, you’ll need to fill out and submit a variety of documents to ensure that you receive the loan.
- Business Loan Application (SBA Form 5)
- IRS Form 4506-T
- Your most recent complete copies of your Federal income tax returns
- Personal Finance Statement (SBA Form 413)
- Schedule of liabilities, including all fixed debts (SBA Form 2202)
If you don’t qualify for an SBA Loan, don’t worry. There are luckily a lot of other options available for small businesses in California right now, including the Paycheck Protection Plan. California has over 3.3 million small businesses and the state is always looking for ways to support them, especially during this time.
Paycheck Protection Program
As of April 27, SBA resumed accepting Paycheck Protection Program applications from participating lenders.
The Paycheck Protection Program, known as PPP, is a loan from the SBA designed to provide small businesses with the ability to keep their workers on the payroll. If all employees are kept on the payroll for eight weeks, the SBA will forgive these loans. The only thing the loan can be used for is payroll, rent, mortgage interest, or utilities.
What Qualifies You for PPP?
Small businesses affected by COVID-19 can apply to a PPP loan if they meet the SBA’s size standards or a business, non-profit organization or veteran organization with less than 500 employees. Independent contractors and self-employed people can also apply.
Any business with an NAICS Code that begins with 72 (accommodations and food services) is eligible, even if it has more than one location, if there’s less than 500 employees per location. This actually led to many multi-million dollar companies to qualify for the PPP, causing it to run out. It’s now open again with “new scrutiny” over the small businesses applying.
Some of the bigger companies that took advantage of the PPP have actually given back their loans, claiming they initially misunderstood the intention of the loan. Some of those companies include Nathan’s Famous, Los Angeles Lakers, Kura Sushi, and Shake Shack.
Employment Development Department for Business Owners
The EDD for the state of California has program benefits available for workers and employers whose earnings have been impacted by the COVID-19 pandemic.
What Can I Do if My Business Has Slowed Due to COVID-19
The EDD wants to help you avoid potential layoffs by participating in the Unemployment Insurance Work Sharing Program. This program will allow you to retain your workers by reducing their hours and wages no more than 60%. The wage losses will be partially offset by UI benefits.
What if I Have to Let Go of Some Workers Temporarily
Workers can file for unemployment benefits as long as they are unemployed. If they are expected to return to the business once the lockdown ends, they’re not required to actively seek work while applying for unemployment. Since this is a common situation during the COVID-19 outbreak, this is definitely important to note.
What if I Have to Shut Down the Business Permanently?
The EDD will provide a Rapid Response team and program to meet with you and discuss your needs. This can help you avoid layoffs and support your workers through the process. Services include career counseling and helping them fill out unemployment forms, helping you and your employees every step of the way.
What if I Can’t Pay or File My Payroll Taxes?
If your business has been negatively impacted by COVID-19, you can request an extension up to 60 days for state payroll reports. There will be no penalties. Contact EDD Taxpayer Assistance Center at 1-888-745-3886.
What Benefits are Available if I’m Sick?
If exposure to coronavirus has left you unable to work and you have medical documents to support it, file a Disability Insurance claim. DI provides short-term benefit payments who have full or partial loss of wages. The governor’s executive order waives the unpaid waiting period (one-week), meaning you will get your payments within a couple of weeks of getting a claim. The benefits range from 60 to 70% of your wages, depending on income.
With so much changing with the pandemic every day, it can be tough to know if you qualify for these benefits. If you are not sick but have been forced to quarantine, making you unable to work, you are encouraged to apply for UI benefits. If you are forced to work remotely but your hours have not been greatly reduced, you are not eligible for unemployment.
The coronavirus pandemic has unfortunately wreaked havoc on many small businesses. Some are facing closure, temporary or permanent. Others are worried they will have to let go of good workers. Luckily, there are a lot of resources in California for the small businesses affected by the COVID-19 pandemic.
And remember, TailoredSpace is always here for you, too. We offer cost effective and customized office spaces that reflect any changes you need to make during this time. Contact us today to find out how we can help.