How the federal and state governments support small businesses in COVID-19
Date：2021-08-25，View：212，
How the federal and state governments support small businesses in COVID-19
The outbreak of COVID-19 has seriously damaged the US economy. Small and medium-sized enterprises are the main driving force for national economic and social development. However, small and medium-sized enterprises suffer from losses in COVID-19 due to their small size and scarcity of free cash flow. In response, the US government has taken a series of large-scale actions to stabilize and stimulate the economy. The latest measures taken by the US government have passed an economic rescue plan, namely, the COVID-19 assistance, relief and Economic Security Act (hereinafter referred to as the "CARES bill"). The house and Senate of Congress passed the cares bill last week, and the president signed the bill into law on March 27, 2020.
The CARES bill is the third phase of a series of measures taken by the US government to deal with the economic recession caused by the outbreak of COVID-19. The first stage is the coronavirus prevention and response supplementary appropriation act, which is an emergency supplementary Appropriation Bill signed by President trump on March 6, 2020. The bill allocates about $8 billion to U.S. federal agencies for purposes including vaccine development, disease monitoring and disaster loans. The second stage is the family priority COVID-19 Emergency Act, which was signed by President Trump in March 18, 2020. The aim is to increase food aid and unemployment benefits and increase Medicaid funds by providing paid sick leave, tax credits and free COVID-19 tests to reduce the impact of the epidemic on the working class in the United States. In addition, the U.S. Federal Reserve and the Federal Reserve Bank of New York have used their existing powers to inject a lot of liquidity into the market.
Overview of Care Act
This is a $2 trillion economic stimulus bill, which includes direct cash subsidies to taxpayers, expansion of unemployment insurance (250 billion), subsidies to state governments and loan subsidies to enterprises. Of this, $376 billion will be used for loans to small businesses ($376 billion in relief for American workers and small businesses). So what loan projects does this 376 billion yuan include?
They are: (1) PPP, which is used to maintain employees' wages. In short, the U.S. government hopes that the company will try not to fire employees, so it provides funds to the company to pay employees. In this case, if the conditions are met, the loan may not be repaid（ 2) Disaster loans（ 3) Bridge loan（ 4) Debt relief.
Federal level small business assistance measures based on American SBA
According to the care act, SBA immediately established the column of "coronavirus relief measures" to review the four newly established interim plans to deal with covid-19 epidemic in the care act.
PPP salary protection plan. Provide loans of up to US $10 million to enterprises with less than 500 employees. If the enterprise maintains its payroll at the normal wage level of employees for 8 weeks, it can be exempted from paying back loans.
Eidl advance payment plan. The plan will provide up to $10000 in economic relief to enterprises currently experiencing temporary difficulties without repayment.
SBA express bridge loan program. The program aims to enable small businesses with business connections with current SBA lenders to quickly obtain working capital of up to $25000.
SBA debt relief program. The plan aims to provide financial mitigation opportunities for small businesses during the covid-19 pandemic, such as SBA will automatically pay the principal, interest and expenses of current 7 (a) loans, 504 loans and microfinance for a period of 6 months, etc.
In addition, the federal level of the United States has also taken targeted measures to extend the federal income tax declaration and payment period. In response to the covid-19 epidemic, the U.S. Treasury and the IRS are providing special tax filing and relief for individuals and enterprises. The deadline for submitting tax returns has been extended from April 15, 2020 to July 15, 2020. For taxes not exceeding $10 million, the IRS also extends the deadline for individuals and businesses to July 15, 2020.
Eidl disaster loan
（1） Eidl advance payment USD 10000
The non repayable loan with an advance payment of $10000 from eidl is part of SBA's economic disaster loans. In essence, this is a commercial loan with relatively low interest rate, which is lent through banks. The interest rate for small enterprises is 3.75% and that for private non-profit organizations is 2.75%. The applicant can obtain a disaster loan of up to $2 million. The loan can be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid due to the impact of the disaster. The loan term can be up to 30 years. The purpose of this loan is to help small enterprises directly affected by covid-19 since January 31, fulfill their financial obligations and operating expenses, and provide crucial economic assistance to small enterprises, so as to help overcome the income loss being suffered by small enterprises and survive the epidemic smoothly.
（2） Applicant
Qualified applicants refer to small enterprises with less than 500 employees directly affected by covid-19 since January 31 (more than 500 in individual industries, according to the guidance of SBA), including self-employed, contract workers and self-employed, private non-profit organizations of any size, small agricultural cooperatives and small aquaculture enterprises. Many affected restaurants, hair salons, gyms, decoration companies, even start-ups (non venture capital), self-employed persons, Uber drivers, real estate agents, etc. can apply as long as they meet the conditions. After consulting the official guidance documents, the disaster loan does not restrict foreign-invested enterprises from applying. Therefore, the applicant can be a company invested by Chinese investors in the United States, but it should meet the requirements of the guidance documents on enterprise scale and number of employees.
（3） Application conditions
Does the business exist before January 31? Does the business have financial difficulties and need to borrow? Is this difficulty caused by the epidemic? If the above three conditions are met, you can apply for disaster loans.
If the applicant does not need the money urgently, it is not recommended to apply for advance payment of disaster loan. For example, if the applicant can't afford the rent, salary or company debt because of the epidemic, he can apply for the advance payment of disaster loan, but if the personal income is reduced only because of the epidemic, it is not recommended to apply.
In the process of application, the applicant needs to fill in the enterprise information and tax number, the applicant's personal information and tax number, which are published to the applicant's insurance institutions, banks and other institutions. The approval of disaster loans depends on the financial impact of covid-19 on the applicant. Because this loan project is provided to people and enterprises in real need, especially emergency prepayment, all the information provided by the applicant must be true at the beginning of the application, otherwise it will bear the legal consequences. Wrong application or malicious application will bear civil legal liability, i.e. compensation of 1.5 times the loan amount. If false statements in the application constitute fraud, the applicant will also face imprisonment.
Coronavirus small business assistance program in U.S. states
California
Covid-19 small business flexibility fund, San Francisco. Small businesses with one to five employees can apply for up to $10000 in emergency funds to help them pay rent and employee salaries.
Los Angeles small business emergency microfinance program. Businesses and microenterprises in Los Angeles responsible for providing jobs for low-income people can get emergency microfinance of $5000 to $20000. The interest rate of 6-month to 1-year loan is 0, and the interest rate of 5-year loan is 3% to 5%.
Colorado
Denver small business emergency rescue. The plan provides cash subsidies of up to $7500 to enterprises in industries severely hit by coronavirus.
Florida
Florida small business emergency bridge loan program. Small businesses affected by coronavirus can obtain loans of up to US $50000 (US $100000 in some special cases). These loans are intended to be used as short-term funds and need to be repaid once the enterprise can obtain alternative funds. The loan is interest free for one year, and then the interest rate is 12%.
Illinois
Chicago small business flexibility fund. From March 31, small businesses in Chicago can apply for up to $50000 in low interest loans with a repayment period of up to five years.
Michigan
Michigan small business relief program. Subsidies and loans will be provided to small businesses affected by coronavirus from around April 1. The maximum amount of subsidy is USD 10000, which is used to pay working capital; The loan amount is US $50000 to US $200000 with an interest rate of 25%.
New York State
New York City employee retention plan. Small businesses with one to four employees can apply for a grant of up to $27000, covering 40% of the salary cost within two months. At the same time, if the company has less than 100 employees, it can obtain an interest free loan of US $75000 from the city to make up for the loss of income.
Oregon
Beaverton emergency operational assistance program. Enterprises ordered to close down due to the government's coronavirus guidelines can apply for rent or mortgage repayment of $2500 a month in case of emergency in the city.
Hillsborough small business emergency relief program. From March 23 to April 20, Hillsborough enterprises can apply for a subsidy of $5000 to offset the losses associated with coronavirus. Give priority to restaurants, bars and educational facilities serving a large number of people.
Small business assistance program for advantageous enterprises
Amazon neighborhood small business relief fund: enterprises in Bellevue, Washington, Seattle South Lake alliance and grade neighborhoods, especially those labor-intensive enterprises, can apply online for a subsidy from Amazon's $5 million fund. Only companies with no more than 50 employees or an annual income of less than $7 million are eligible for the grant.
Facebook small business funding program. Facebook promised to provide $100 million in cash subsidies and Facebook advertising credit to 30000 small businesses. The grant will be available to enterprises in more than 30 countries（ Note: (1) because of the constant updating of relief measures in various states and enterprises in the United States, the assistance measures of American States and enterprises to small businesses affected by COVID-19 may not be complete. 2) Since there is no "small and medium-sized enterprise" in the United States, it is generally called "small enterprise", so the article uses "small and medium-sized enterprise" in the analysis of Chinese enterprises and "small enterprise" in the analysis of American enterprises.)
Disclaimer: all the information contained in this article is only for the purpose of providing reference information on relevant issues. Based on different specific facts, the application of relevant tax rules will be very different. Relevant tax laws and regulations will change frequently, and the information in this paper may lag, omit or error. The information provided herein cannot be used as a substitute for the advice provided by professional accounting, tax, legal or other professional consultants. Before making a decision or taking action, please consult the professional service personnel of qiaohui financial accounting firm.