FAQs: How Can N.H.'s Small Businesses Access Federal COVID-19 Funds? | New Hampshire Public Radio

FAQs: How Can N.H.'s Small Businesses Access Federal COVID-19 Funds?

Apr 16, 2020

RiverRun Bookstore In Portsmouth
Credit Dan Tuohy; NHPR

Update (April 16, 2020 at 2:40 p.m): According to their website, the SBA "is unable to accept new applications at this time for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.

EIDL applicants who have already submitted their applications will continue to be processed on a first-come, first-served basis."

In the $2 trillion COVID-19 federal stimulus package passed last month, more than $350 million was earmarked to help small businesses and nonprofits survive the COVID-19 pandemic.

But what are the options for businesses in the state?

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NHPR's The Exchange spoke with Li Zhou, a reporter at Vox covering politics and policy; Rusty Mosca, managing director at Nathan Wechsler Accounting and Business Advisors; and James Gallagher, a commercial loan officer and Senior Vice President at Merrimack County Savings Bank to get some answers. (Scroll down for key takeaways.)

Listen to the full conversation here. 

Quick facts

Check out Li Zhou's reporting on the stimulus package, including information for small businesses and personal stimulus checks.  

Who qualifies?

Small businesses and nonprofits that have less than 500 employees (with some exceptions), self-employed individuals, and independent contractors.

What are the two funding options?

The Economic Injury Disaster Loan (EIDL) Emergency Advance, which businesses apply for directly through the Small Business Administration (SBA).

The Paycheck Protection Program (PPP), which businesses apply for through a bank, credit union, or fintech company (Square and Paypal), and is designed to cover eight weeks of payroll and other expenses.

Where can I find more information?

Key takeaways and highlights

Note: These answers have been lightly edited for clarity. Listen to the full Exchange program here.

Is there enough money to help all the small businesses and nonprofits that need it nationwide?

Li Zhou:

That's the biggest question right now. And the conclusion that lawmakers, both Republican and Democrat, have come to is that there is not enough money, and that these programs are definitely going to have to be replenished, likely in the next package that they try to pass in the next couple of weeks...

Marco Rubio, who is the chair of the Senate Small Business Committee, has been posting these regular updates on social media. His sense is that the money could burn out as soon as this week for this program. So it's really go going quickly.

The money could burn out as soon as this week for this program.

Who qualifies for the Payroll Protection Program (PPP)?

Li Zhou:

The purpose of this Paycheck Protection Program, as the name indicates, is to help businesses cover payroll costs.

And so the main driving force behind it is that businesses can get these loans completely forgiven if they don't lay off workers or they rehire workers that they've already laid off before the June 30th deadline set in the program.

How do businesses prove they qualify for aid?

Li Zhou:

They have to show that they are facing some form of economic uncertainty, which is a bit broad…

If you're just seeing less sales at your business, less revenue coming in; anything that can demonstrate that is a helpful piece of paperwork or documentation that would be good to bring in when you're applying for this program 

What must PPP loans be used for in order to qualify for forgiveness?

Li Zhou:

It is important to know that there are restrictions: one of them is that 75 percent of the loan needs to be used for payroll costs. So other aspects of it can be used to cover things like rent, interest on your mortgage, or utilities. But a big chunk of that has to be shown that it was used for payroll.

75 percent of the PPP loan needs to be used for payroll costs.

And the way that they're trying to calculate how much companies are getting is the estimate of 2.5 times your monthly payroll cost. So being able to offer that calculation and have that information ready when you apply is also important.

How is the EIDL different from PPP?

Li Zhou:

This might be a quicker way potentially for people to get money, although the caution is that it has also seen a huge demand, so there are delays on that front as well.

The main difference in the offering is that the grant is $10,000. Businesses and nonprofits can apply to it. It's completely forgivable. 

One of the strings that they've started to attach for some businesses now is that they're limiting the amount to $1000 per employee of that business. So if you have a three person business, you wouldn't be eligible for the full ten thousand dollars, you'd only be eligible for three thousand dollars. So that's something to keep in mind.

But the upside of this is that ideally it would get processed more quickly, and that you get a grant to help cover immediate costs in a way that, you know, it's the PPP is taking more time.

How do businesses decide whether to apply for PPP or lay employees off so those employees can take advantage of the new unemployment benefits?

Rusty Mosca:

If you're going to lay off people, most likely you're achieving what Congress and what the program's all about...

If it's better for the worker, and you're going to be able to rehire these people later when things turn around, and you're not worried that they may decide to do something different.

The people that are on unemployment are not receiving health benefits that they could be receiving if they were still employed. And so there's different elements to it. I think it is a difficult situation.

What is the window to distribute money?

Rusty Mosca:

A lender has ten days to distribute the money to a borrower. And at that point in time, the borrower receives the money. They have an eight week window [to use the funds] under the current rules. 

And these rules change daily. I looked at something yesterday that helped discuss everything for self-employed individual versus a corporation. And because the rules are going to continue to come out, the issue becomes what are the rules that are going to be in play?

You really have to look at: will I be able to generate some sales, get myself in position where it makes sense for me to hold on to these people? And also, will I be able to utilize the forgiveness rules so that I can at least look at my total proceeds and know that I've got 75 percent of it covered [by payroll]?

What if I have a seasonal business?

James Gallagher:

If you're a seasonal business, you're more likely to look at a period between February and June 30th of 2019. Keep in mind that the impact is time when the shutdown is taking place as a result of the of the coronavirus virus.