Funding Sources for Small Businesses

The coronavirus pandemic has put a tremendous strain on many small businesses, as social-distancing practices, closures, layoffs, and state-implemented restrictions threaten their ability to sustain operations. However, many local and nationwide organizations are providing assistance to small businesses during this challenging time. Experts encourage those who will need financial help to prepare ahead by collecting all documents necessary for loan applications, including financial, accounting and employee records.

Government relief programs

Paycheck Protection Program of the CARES Act - The $2.2 trillion coronavirus spending bill was passed by the House of Representatives and Senate on Friday, March 27, 2020. The bill provides a $349-billion lending program for small businesses, while also increasing unemployment payments and benefits.

There is an 100-percent government guarantee of loans through December 31, 2020 for SBA 7(A) loans. This includes companies with less than 500 employees and less than a certain gross annual amount, depending on the industry. Lenders determine if the business was operational by confirming it had paid its employees’ salaries and payroll taxes by February 15, 2020.

Funding Limit: $10 million through December 31, 2020

Small Business Administration - The SBA continues to be the default option for most small businesses. The agency provides 3.75-percent interest rate disaster loans to help U.S. small businesses and nonprofits that are facing temporary loss of revenue during declared disasters. A tip for success? Since an SBA loan is conferred at the discretion of the bank you apply to, it’s best to apply for one at a bank with which you have a positive long-standing relationship.

Funding Limit: $2 million

City specific initiatives

New York City Hall - It was announced on March 8 that NYC will provide relief for small businesses seeing a reduction in revenue because of the vast spread of COVID-19 in the area. The following programs are available to small businesses located within New York City’s five boroughs with a proven record of at least a 25-percent decrease in revenue, and which have been operating for more than 6 months and have no outstanding tax or legal issues.

• NYC Employee Retention Grant Program - Businesses with less than 5 employees are covered for 40 percent of payroll costs for 2 months to help retain employees.

• NYC Small Business Continuity Loan Fund - Businesses with less than 100 employees are eligible for zero-interest loans to help retain employees and encourage business continuity.

Funding Limit: Up to $75,000 loans

Grant Program for Newark Small Businesses - Newark Mayor Ras J. Baraka announced on March 26 that this program will provide small businesses emergency grants. The City will offer about 200 business grants up to $10,000 to help cover operating costs, payroll, inventory, equipment, rent, taxes, licensing or any other necessary business-related expenses. Businesses must have a physical location located in Newark, have less than 10 employees and prove that loss of income directly related to the COVID-19 outbreak.

San Francisco City Hal****l - Major London Breed announced that the city of San Francisco will provide grants and low-interest loans to small businesses impacted by the coronavirus.

• Small Business Resiliency Fund - The city has established a relief fund to offer emergency grants of up to $10,000 for businesses with 1-5 employees showing a decrease of more than 25-percent in sales and less than $2.5 million in gross revenue.

• New Arts Relief Program - Administered by San Francisco’s Center for Cultural Innovation, the program offers up to $2,000 grants to individuals, teaching artists and small- to mid-sized art organizations, who are all eligible for $5,000 to $25,000. This is aimed to help pay rent and salaries, to retain employees and to “help keep artists and organizations in San Francisco,” according to the announcement.

Funding Limit: $2.5 million ($1.5 million in grants and $1 million in loans)

Funding Limit: $100 million

Corporate funding initiatives

JP Morgan Chase - The company’s Head of Corporate Responsibility Peter Scher, announced plans to launch a $50 million fund in humanitarian aid and small business grants to help communities recover from losses due to COVID-19.

The funds will be spread among the following areas of need: $5 million to provide immediate healthcare, food and other relief; $2 million to nonprofits responding to crisis; $8 million to assist small businesses; and the remaining $35 million to be distributed over time, according to need.

Funding Limit: $50 million

Amazon - Provides grants to Seattle-area small businesses with less than 50 employees or less than $7 million in revenue.

• Neighborhood Small Business Relief Fund - Grants will be provided in varying amounts with the goal of helping cover businesses’ day-to-day costs. To be eligible, small businesses must be a service or retail establishment open to the general public.

Funding Limit: $5 million

Chicago Small Business Resiliency Loan Fund- Mayor Lori E. Lightfoot launched this new funding program for local businesses being impacted by the spread of coronavirus in the city.

The loans will be funded by the following sources: $25 million from the City of Chicago; $50 million by the Chicago Community Catalyst Fund; $10 million from Goldman Sachs’ Urban Investment Group; $1 million from Fifth Third Bank; $250k from construction company Clayco Inc.; and $15 million from unnamed private funding sources.