For Iowans with questions about COVID-19, a public hotline is available 24/7: just call 2-1-1.
99% of our businesses in Iowa are small businesses. I’ve been in touch with a number of small business owners who are concerned about the immediate, and future, impact COVID-19 could have on them and the Iowans they employ. As a member of the Senate Committee on Small Business and Entrepreneurship, I’m working hard to provide relief to these small businesses in the most effective and efficient way possible.
The Small Business Administration (SBA) has guidance for small businesses as well as loan resources as we navigate this challenging episode. Small businesses are encouraged to do their part to keep their employees, customers, and themselves healthy. Please take advantage of the resources below:
- Paycheck Protection Program
- Economic Injury Disaster Loan Program
- SBA Debt Relief
- SBA Express Bridge Loans
- Guidance for Businesses and Employers
- SBA Products and Resources
- Government Contracting
- Local Assistance
CARES Act Assistance for Small Businesses
Paycheck Protection Program – The CARES Act establishes the Paycheck Protection Program, a $350 billion loan program to help small and mid-sized businesses with cash flow during the COVID-19 crisis. If the business maintains their payroll (or rehires workers) from February 15 to June 30, the portion of the loan used for payroll costs, mortgage interest, rent, and utilities over an 8 week period would be forgiven.
Both the Small Business Administration (SBA) and the Department of the Treasury have released information on this program. I encourage you to visit their websites for additional details, including the program application and a tool to find eligible lenders.
Who is eligible to receive the loans?
- Businesses with 500 or less employees;
- Businesses that meet current Small Business Administration (SBA) size standards;
- Self-employed individuals and “gig economy” workers;
- Certain nonprofits, including 501(c)(3) organizations and 501(c)(19) veteran organizations; and
- Tribal businesses with under 500 employees.
What is the size of the loans?
- The maximum loan size is 250% of the employer’s average monthly payroll, or $10 million (whichever is less).
What can loans be used for?
- Payroll costs (salary, wages, and payment of cash tips up to annual rate of $100,000 per employee);
- Continuation of health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
- Employee salaries, commissions, or similar compensations;
- Payments of interest on mortgage obligations;
- Rent, including rent under lease agreement;
- Utilities; and
How does the loan forgiveness work?
- Borrowers can be eligible for loan forgiveness equal to the amount they spend on payroll, interest on mortgages, rent, and utilities during the 8-week period after the loan’s origination. However, at least 75 percent of the amount forgiven must be for payroll costs.
- The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year, and by any reduction in pay of employee beyond 25% of their prior year compensation. To encourage employers to rehire any employees who have already been laid off, borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.
Who makes and approves the loans?
- The loans will be 100% backed by the government, but the authority to make and approve loans is delegated to local banks and credit unions.
- Financial institutions that are already approved 7(a) lenders are automatically eligible to participate, and we expect many other financial institutions to become approved soon. Click here to view find eligible lenders in your area.
Can businesses receive this and an Economic Injury Disaster Loan?
- A small business can obtain a new Paycheck Protection loan and an SBA Economic Injury Disaster Loan (EIDL) so long as they cover different items. There is also an option to refinance an EIDL loan into the Paycheck Protection Program loan.
Other Resources in CARES Act:
- Employee retention credit – In lieu of the Paycheck Protection Program, employers can opt to receive a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 crisis. Available to employers with operations that were at least partially suspended because of a shutdown order, or employers who had gross receipts decline at least 50% relative to the same quarter last year. Click here for more information.
- Delay of payment of employer payroll taxes – Allows employers and self-employed individuals to defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government with respect to their employees. Deferred tax would be paid in the following two years.
- Emergency EIDL Grants – The bill expands eligibility for entities suffering economic harm due to COVID-19 to access SBA’s Economic Injury Disaster Loans (EIDL), while also giving SBA more flexibility to process and disperse small dollar loans. The bill would allow businesses that apply for an EIDL expedited access to capital through an Emergency Grant—an advance of $10,000 within 3 days to maintain payroll, provide sick leave, & service other debt obligations. Click here for more information.
- Small Business Debt Relief – The bill requires SBA to pay all principal, interest, and fees on all existing SBA loan products, including 7(a), Community Advantage, 504, and Microloan programs, for six months to provide relief to small businesses negatively affected by COVID-19. Click here for more information.
Families First Coronavirus Response Act
The Families First Coronavirus Response Act gives American businesses with fewer than 500 employees funds to provide their employees with paid leave, either for the employee’s own health needs or to care for family members. More information is available on the Department of Labor’s website.
Coronavirus-related Tax Information
President Trump has announced Tax Day is being delayed until July 15. Individuals and businesses can now file their federal tax returns by July 15.
In addition, the Iowa Department of Revenue has extended the filing and payment deadline for several state tax types, including income tax. The change gives small business owners flexibility during a tough time of disruptions and challenges.
The order extends filing and payment deadlines for income, franchise, and moneys and credits taxes until July 31, 2020. Small business owners who need assistance can contact the Iowa Department of Revenue at email@example.com or call 515-281-3114 or 1-800-367-3388.