As the Paycheck Protection Program (PPP) winds down, the federal government is preparing to launch two new industry-specific small-business relief programs.
The PPP has been a lifeline for business owners, allowing them to recapture revenue drops caused by the Coronavirus pandemic and economic downturn. With those funds, entrepreneurs are rebuilding and pivoting to the new business normal. However, all good things must come to an end. The deadline to apply for these forgivable funds is May 31, 2021.
Here’s what you need to know about other economic relief programs once the PPP deadline is reached or the funds run out.
Shuttered Venue Operators Grant
The Small Business Administration (SBA) will soon start taking applications for a $16 billion grant fund for live-event businesses like theaters and music clubs. The program faces significant challenges when its application system malfunctioned, hurting thousands of businesses waiting months for the promised aid.
Updated launch date: The SBA announced on their website that they have completed rigorous testing and the Shuttered Venue Operators Grant application portal will reopen on Monday, April 26 at 12pm ET. Updated guidance documents have been posted below. Applicants may continue to register for an application portal account.
Federal disaster loans
When Congress passed the Cares Act, it not only authorized the Paycheck Protection Program, but they also increased a long-standing business aid programs. The Small Business Administration (SBA) was granted $360 billion to support low-interest loans made through the Economic Injury Disaster Loan, or EIDL, program and another $20 billion for grant funding. Those who applied for a loan at the outset, regardless of whether their application was accepted, could receive up to $10,000 in grant funding per applicant. That amount was later limited to $1,000 per employee up to a maximum of $10,000. The advance funding has expired, however. Additionally, traditionally, eligible businesses can apply for EIDLs valued up to $2 million, but loans were capped at $150,000 each in May.
EIDL loans are a good deal with a 3.75 percent interest rate and 30-year maturity. Payments can also be deferred for one year. The loan proceeds can be used for almost any business expense. Check with a financial consultant to determine where the money would best be spent.
Employee Retention Tax Credit
The Employee Retention Tax Credit (ERTC) under the CARES Act encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
Eligible Employers are employers that conduct business during calendar year 2020, including tax-exempt organizations, that either:
- Fully or partially suspend operation during any calendar quarter in 2020 due to orders from an appropriate governmental authority limiting commerce, travel, or group meetings (for commercial, social, religious, or other purposes) due to COVID-19; or
- Experience a significant decline in gross receipts during the calendar quarter.
Note: Tribal governments and tribal entities may be Eligible Employers. See Are tribal governments and tribal entities eligible for the Employee Retention Credit? Also, self-employed individuals are not eligible for this credit for their own self-employment earnings, though they may be able to claim the credit for wages paid to their employees.
7(a) loan program
The PPP was largely modeled on the SBA's 7(a) program, known as the “gold standard” in small business funding.
SBA loans have low rates, long terms and very low monthly payments. It’s a government-guaranteed small business loan with a long-term and a low-interest rate.
The most common misunderstanding about these loans is that the SBA government organization lends money directly to small businesses. However, the agency typically does not make direct loans. The SBA provides a guarantee on the loan, promising to reimburse the bank for a certain percentage of your loan if you default on that loan. This guarantee lowers the risks to banks and other lenders, encouraging them to offer these loans to more American small businesses.
Many banks and other financial institutions offer SBA loans, but their process, requirements, and fees can vary. For in-depth information about the popular SBA 7(a) loan program, visit the SmartBiz Small Business blog and review our comprehensive article: What is an SBA Loan?
Restaurant Revitalization Fund
The Restaurant Revitalization Fund is a $28.6 billion support program for bars, restaurants and food trucks whose sales were crushed by required state shutdowns in response to the pandemic.
This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023.
Eligible entities who have experienced pandemic-related revenue loss include:
- Food stands, food trucks, food carts
- Bars, saloons, lounges, taverns
- Snack and nonalcoholic beverage bars
- Bakeries (onsite sales to the public comprise at least 33% of gross receipts)
- Brewpubs, tasting rooms, taprooms (onsite sales to the public comprise at least 33% of gross receipts)
- Breweries and/or microbreweries (onsite sales to the public comprise at least 33% of gross receipts)
- Wineries and distilleries (onsite sales to the public comprise at least 33% of gross receipts)
- Inns (onsite sales of food and beverage to the public comprise at least 33% of gross receipts)
- Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
You can apply through SBA-recognized Point of Sale Restaurant Partners or directly via SBA in a forthcoming online application portal. Registration with SAM.gov is not required. DUNS or CAGE identifiers are also not required. For all the details, visit the SBA website.