[Updated: March 30, 2020]

With the World Health Organization declaring COVID-19 a pandemic on March 11, 2020, the impact on our communities and our businesses here in New York and across the United States is likely to be immense and profound.

As of this article’s publication date, a number of options are available to small businesses to seek financing during this incredibly difficult economic period.

NEW YORK CITY ASSISTANCE

On March 8, 2020, Mayor Bill de Blasio announced that the City of New York will provide relief for small businesses that are able to demonstrate that their lost revenue is related to the COVID-19 pandemic.

1. NYC Small Business Continuity Fund

The City of New York is offering qualifying small businesses a zero interest loan up to $75,000 to mitigate losses in profit.

In order to be eligible for the “NYC Small Business Continuity Fund,” the applicant must:

Be located within the five boroughs of New York City;
Demonstrate that the COVID-19 outbreak caused at least a 25% decrease in revenue;
Employ fewer than 100 employees in total across all locations;
Demonstrate a financial ability to repay the loan; and
Have no outstanding tax liens or legal judgments.

To calculate whether there has been at least a 25% decrease in revenue to qualify for this program, New York City will compare average revenue for two months in 2020 (after COVID-19 impact) to both:

average revenue for the same two-month period in 2019, and
average monthly revenue based on total 2019 revenue.

For more information on supporting documents and how to apply, click here.

2. NYC Employee Retention Grant Program

The City of New York is also offering qualifying small businesses a cash grant to cover 40% of payroll costs for two months to help retain employees.

In order to be eligible for the “NYC Employee Retention Grant Program,” the business must:

Be located within the five boroughs of New York City;
Demonstrate that the COVID-19 outbreak caused at least a 25% decrease in revenue;
Employ 1-4 employees in total across all locations;
Have been in operation for at least 6 months;
Have no outstanding tax liens or legal judgments.

To calculate whether there has been at least a 25% decrease in revenue to qualify for this program, New York City will compare average revenue for two months in 2020 (after COVID-19 impact) to both:

average revenue for the same two-month period in 2019, and
average monthly revenue based on total 2019 revenue.

For more information on supporting documents and how to apply, click here.

FEDERAL ASSISTANCE

1. U.S. Small Business Administration (“SBA”) Economic Injury Disaster Loan Program

Under the Coronavirus Preparedness and Response Supplemental Appropriations Act that was signed by the President on March 6, 2020, the SBA has been granted authority to issues low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19. Qualifying businesses located in New York are eligible for SBA’s Economic Injury Disaster Loans.

SBA measures small businesses based on a published sized standard. The definition of “small” varies by industry. To see if your business qualifies, view the SBA's size standards here.

If your business qualifies under those federal standards, the loan is for up to $2 million in assistance that can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The actual amount of each loan is limited to the economic injury, as determined by SBA.

The interest rate is determined by formulas set by law. The maximum rate for such loans is 3.75%. The law authorized loan terms up to a maximum of 30 years. SBA determines the loan term based on the financial condition of each borrower.

For more information on Economic Injury Disaster Loans and to apply, click here.

Under the Coronavirus Aid Relief, and Economic Security (“CARES”) Act (H.R. 748) which was signed into law on March 27, 2020, eligible businesses may apply for immediate assistance while they wait for approval of Economic Injury Disaster Loans.

First, eligible businesses may apply for an immediate loan advance of up to $10,000. These funds will be made available within three days of a successful application, and this advance will not have to be repaid. For more information and to apply for this type of loan advance, click here.

Second, the “Express Bridge Loan Pilot Program” allows small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 while applying for an Economic Injury Disaster Loan. For more information and to apply for an Express Bridge Loan, click here.

2. SBA Paycheck Protection Program

Under the CARES Act, the SBA has been granted the authority the distribution of up to $359 billion to incentive small business to keep their workers on payroll under the Paycheck Protection Program.

If your business qualifies, the loan is for up to $10 million determined by 8 weeks of prior average payroll plus an additional 25%. Further, if all employees are kept on payroll for eight weeks, SBA will forgive up to 100% of the portion of the loan used for payroll, rent, mortgage interest, or utilities.

In order to be eligible for the “Paycheck Protection Program,” your businesses must employ 500 or fewer employees, outside of a few exceptions.

For more information, click here.

3. Other SBA Programs

Outside of disaster assistance, SBA offers a variety of other assistance to small businesses such as loans guaranteed by the SBA and SBA-guaranteed surety bonds. Generally, such programs are not available directly from SBA but rather through commercial lenders.

For more information on other assistance, click here.

NEW YORK STATE ASSISTANCE

As of this article, New York State is still currently assessing options to mitigate hardships to businesses in the state and is directing businesses to SBA’s programs.

By: Mackenzie E. Roach, Esq.
Of Counsel, the Ciric Law Firm, PLLC

This material is for general information purposes only and should not be construed as legal advice or any other advice on any specific facts or circumstances. No one should act or refrain from acting based upon any information herein without seeking professional legal advice. The Ciric Law Firm, PLLC makes no warranties, representations, or claims of any kind concerning the content herein. The Ciric Law Firm, PLLC and the contributing presenters or authors expressly disclaim all liability to any person in respect of the consequences of anything done or not done in reliance upon the use of contents included herein.