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A Guide for Minnesota Small Businesses Who Need Help

Over the past few weeks, several state and federal programs have been built to assist small businesses struggling during the COVID-19 pandemic.

Different programs make sense for different businesses, so we’re providing this summary guide to help small businesses quickly see which programs might be right for their situation.

SBA Economic Injury Disaster Loan (EIDL)

  • Please note: As of April 27, 2020. After receiving additional federal funding, on April 27 SBA will also resume processing EIDL Loan and Advance applications that are already in the queue on a first come, first-served basis. SBA will provide further information on the availability of the EIDL portal to receive new applications (including those from agricultural enterprises) as soon as possible on their website at sba.gov.
  • Summary of Program: Low interest, long term Economic Injury Disaster Loans for up to $2 million: The first payment is deferred for 12 months. The application has been simplified and can be completed 100% online through our improved web portal at www.sba.gov/disaster. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75% and the loans can be extended over 30 years.
  • Why this might make sense for you: The SBA EIDL can be used to maintain payroll, provide paid sick leave, meet increased costs, make rent or mortgage payments, as well as repay unmet expenses and obligations.
  • SBA EIDL Grants - Businesses applying for an EIDL loan can request up to $10,000 be disbursed quickly prior to the official loan offer. The amount need not be repaid under any circumstances regardless of the loan decision. The form to apply for an advance is part of the new EIDL application. If you have already applied for an EIDL Loan and wish to apply for the advance, please fill out the new, streamlined application.
  • Why this might make sense to you: This advance may be available even if your EIDL application was declined or is still pending, and will be forgiven.
  • There are limited funds available and they are available on a first-come, first-served basis. More funds may be appropriated by the U.S. Congress for this program.

SBA Paycheck Protection Program (PPP)

  • After receiving additional federal funding, SBA resumed accepting Paycheck Protection Program applications from participating lenders on Monday, April 27, 2020 at 9:30 CDT.
  • Summary of Program: The SBA PPP is a new federal $350 billion loan program administered by the SBA that provides loans up to 2.5 months' worth of payroll cost up to $10 million for small businesses, self-employed people, sole proprietors, independent contractors and gig workers to maintain payroll during the COVID-19 pandemic. If the loans are used for eligible uses and employers maintain payroll for eight weeks after the loans are dispersed the loan will be forgiven.
  • Why this might make sense for you: If a self-employed person needs compensation or a business or nonprofit needs funds for employee compensation, including: salaries, wages, commissions, or similar compensation; cash tips or equivalents; vacation, parental, family, medical, or sick leave; payment required for providing group health care benefits (including insurance premiums); payment of retirement benefits; and payroll taxes. Funding may also be used for payment of interest on mortgage obligations, rent, utilities, and interest on pre-existing debt obligations. At least 75% of the funds must be used for payroll for the loan to be forgiven 100%. Unforgiven portions of the loan will have 1% be deferred 12 months and have a terms up to 10 years.
  • How to Apply. You will apply directly with a local lender. We advise you start with your existing lender as they may already be participating in the program or can refer to a participating lender. You can also find a lender here.

SBA Express Bridge Loans

  • Summary of Program: SBA Express Bridge Loans is new federal program through the SBA that enables small businesses who currently have a business relationship with an SBA Express Lender to access up to $25,000 quickly that can be repaid in full or in part by proceeds from the EIDL loan.
  • Why this might make sense for you: If you are a small business owner with an existing relationship with an SBA Express Lender these loans can quickly provide vital economic support your business to help overcome the temporary loss of revenue they are experiencing and can be a term loans or used to bridge the gap while applying for a direct SBA Economic Injury Disaster loan.
  • How to apply: Apply directly with your existing lender.

SBA Debt Relief

  • Summary of Program: If you have a current or SBA 7(a), 504 or microloan the SBA will automatically pay the principal, interest, and fees for a period of six months. This also applies to new loans issued prior to September 27, 2020.
  • Why this might make sense for you: It provides immediate financial relief on current SBA debt with no penalties or interest or additional obligations.
  • How to apply: It is automatically applied for all eligible SBA 7(a), 504 or microloans.

IRS Employee Retention Credit

  • Summary of Program: The Employee Retention Credit is a refundable tax credit against certain employment taxes equal to 50 percent of the qualified wages an eligible employer pays to employees after March 12, 2020, and before January 1, 2021. Eligible employers can get immediate access to the credit by reducing employment tax deposits they are otherwise required to make. Also, if the employer's employment tax deposits are not sufficient to cover the credit, the employer may get an advance payment from the IRS. The maximum credit is $5000 per employee. Participating in this program makes your business ineligible to participate in the PPP program.
  • What this might make sense for you: If the Paycheck Protection Program does not meet your business needs or is otherwise unavailable to your business you can consider the Employee Retention Credit.
  • How to apply: You can claim the credit through your regular IRS tax payment process. To request an advance you can submit Form 7200.

Pandemic Unemployment Assistance Program

  • Summary of Program: Congress authorized a new Pandemic Unemployment Assistance program that covers those who do not qualify for regular Unemployment Insurance benefits, such as independent contractors and self-employed people. The program was authorized but must be created by the states, so Minnesota must build out this program before it can be implemented. More information will be available soon, however it could be several weeks before payments begin. We expect the program to begin making payments by the end of April 2020.
  • Why this might make sense for you: If you are an independent contractor or self-employed person who would not typically be eligible for unemployment benefits, but you have lost income due to the COVID-19 pandemic.
  • How to apply: we encourage those who may be eligible to create an account at uimn.org to begin the process. Once the program is live we will reach out with additional instructions.
  • Your participation in other small business relief programs such as PPP may impact the benefits you could receive from the Pandemic Unemployment Assistance Program.

Minnesota Small Business Emergency Loan Program

  • Current loan requests have exceeded funding availability. Please visit this site regularly to learn if the legislature has made additional loan funds available.
  • Summary of Program: Minnesota Small Business Emergency Loans are made through an approved lender. These loans are for $2,500 to $35,000 and at a 0% interest rate. There is a total of $30 million available for this program.
  • Why this might make sense for you: If you are affected by Executive Orders 20-04 and 20-08, this program could provide a 0% loan to help you meet expenses.

Minnesota Small Business Loan Guarantee Program

  • Summary of Program: This program provides a 80% loan guarantee for loans up to $250,000 made by a qualified economic development lender within this program. This program is intended to incent the private market to make loans to small businesses and provides the guarantee for those loan dollars. The state is providing a loan guarantee of $10 million which is likely to leverage between $20 and $25 million in lending by private banks.
  • Why this might make sense for you: Your lender will consider your situation and may require this guarantee in order to lend money to your business.

Unemployment Insurance Shared Work Program

  • Summary of Program: The Shared Work program offers an alternative to layoffs for employers facing a temporary downturn in business. Administered by DEED’s Unemployment Insurance Division, the program allows employers to divide available hours of work among a group of employees instead of implementing a full layoff. These employees may then receive partial unemployment insurance benefits while working reduced hours. The purpose of Shared Work is to avoid a layoff, not to subsidize wages.
  • Why this might make sense for you: Shared Work can help employers avoid the difficulties that can go along with a layoff. If employees keep working during a temporary slowdown, employers can more quickly gear up when business conditions improve. Learn more about the Shared Work Program on our Unemployment Insurance Division's website

So given these options, where should you start?

1. First, we recommend is contacting your insurance company. You may have access to benefits you’ve paid into through your policy that could be helpful during this time.

2. Next, before pursing financial assistance for your business review this helpful guide from the Federal Trade Commission on the topic of business financing. Be mindful of the business implications and risk of any business financing options and also be aware of potential scams.

3. Next, call your bank. Your banker will have advice for you on:

  • Their own resources
  • Any SBA programs they have access to
  • They may refer you to local lending programs such as those available through non-profits (like the Small Business Emergency Loan Program) or loan programs available in certain cities or counties across Minnesota

4. If you have been denied credit by a bank or the SBA, and/or do not use a bank and/or do not have insurance on your business:

  • You may call a lender in the Small Business Loan Guarantee program. You can see lenders on the Minnesota Small Business Loan Guarantee Program page on the DEED website.
  • You could call your city or county to see if they have a revolving loan fund that is available to your business. Please note that not many cities in the metro area have these revolving loan funds and those that do will have underwriting criteria.

Visit the COVID-19 Information for Employers and Businesses page on the DEED website for more resources related to business assistance, Unemployment Insurance and FAQs.

View the Matrix of Emergency Financial Assistance for Small Businesses, Startups, and Non-Profit Organizations

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