COVID Small Business Effects. In this time of the COVID-19 pandemic, small businesses have found themselves in need of relief options in response to negative impacts as the market has dipped and dived. Because small business voices are often drowned out by big business voices, small businesses must make bold and direct stands to express their needs, so that the federal government considers what is required for their survival when drafting emergency stimulus packages and other impactful economic policies.
The most vulnerable small businesses have limited financial resources, which means they will teeter on the edge of survival at best and cease operations completely at worst if the pandemic lingers and continues to impact the market. To avoid full closure, many small businesses have leaned on federal relief resources, including the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act. The CARES Act was passed by Congress and signed into law by President Trump on March 27th, 2020; the law intends to provide economic relief to American citizens impacted by the COVID-19 pandemic with immediate and direct economic assistance. Resources available to small businesses under the CARES Act include the Paycheck Protection Program and Economic Injury Disaster Loans. Both of these programs have specific eligibility requirements and guidelines for submitting an application.
The Paycheck Protection Program (PPP) was established to provide resources to small businesses so that they can maintain their payroll and benefits, re-hire previously laid-off employees, and cover any overhead costs of business. It was created to be administered by the U.S. Small Business Administration and backed by the US Department of the Treasury (USDoT) to assist small businesses by providing cash-flow assistance via federally-guaranteed loans, for up to eight weeks. The Paycheck Protection Program Flexibility Act extended the timeline for businesses to use the funds from two months to 24 weeks, though loan forgiveness is still an option in line with the original timeline.
The Economic Injury Disaster Loan (EIDL) program is the primary federal resource available to small businesses affected by any declared disaster, such as the current COVID-19 pandemic. (It is available to other organizations as well, not just small businesses.) It provides economic relief to qualifying applicants in the form of an advance up to $10,000 to cover temporary loss of business revenue and helps them meet financial obligations that would have been met had no disaster occurred. According to the USDoT, the EIDL advance is not required to be repaid to the government.
Surviving the COVID-19 pandemic as a small business requires an exploration of and implementation of resources. Federal relief options are a starting point to this end. Part three of this series will touch on a few proactive strategies that small business owners can take to help themselves further, so they have an even greater chance of enduring and surviving beyond these uncertain times.
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