Small businesses are the lifeblood of our communities, but so many are financially imperiled due to the coronavirus pandemic. To keep our locally-owned businesses open, the City is providing direct assistance and also helping business owners navigate the federal loan programs recently approved by Congress.
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The Coronavirus Aid, Relief, and Economic Security (CARES) Act provides hundreds of billions in Small Business Administration (SBA) loans for emergency assistance to businesses affected by the coronavirus pandemic. In addition to traditional SBA funding programs, the CARES Act established several new temporary programs for small businesses, including the Economic Injury Disaster Loans (EIDL), Emergency Economic Injury Grants, and the Paycheck Protection Program (PPP).
Economic Injury Disaster Loans and Loan Advance
In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000.
The SBA’s Economic Injury Disaster Loan program provides small businesses with working capital loans of up to $2 million that can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. The loan advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available within three days of a successful application, and this loan advance will not have to be repaid.
These grants will end on December 30, 2020.
Paycheck Protection Program
The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing hundreds of billions toward job retention and certain other expenses.
While the last day to apply was August 8, 2020, the Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
Who Can Apply
This program is for any small business with less than 500 employees affected by COVID-19 including:
- Sole proprietorships
- Independent contractors & self-employed persons
- Private non-profit organization or 501(c)(19) veterans organizations
Businesses in certain industries may have more than 500 employees if they meet the SBA’s size standards for those industries. Small businesses in the hospitality and food industry with more than one location could also be eligible at the store and location level if the store employs less than 500 workers. This means each store location could be eligible.
Loan Details and Forgiveness
The Paycheck Protection Program loans up to 2.5 times the borrower’s average monthly payroll costs up to $10 million.
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities. At least 75% of the forgiven amount must have been used for payroll.
Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. This loan has a maturity of two years and an interest rate of 1%.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
CA Infrastructure and Economic Development Bank (IBank) Finance Programs
- The State of California is allocating $50 million to the Small Business Finance Center at California’s IBank to mitigate barriers to capital for those small businesses (1-750 employees) that may not qualify for federal funds (including businesses in low-wealth and immigrant communities). The $50 million allocation will be used to recapitalize the IBank Small Business Loan Guarantee Program.
- Disaster Relief Loan Guarantee Program: This disaster program provides guarantees for loans of up to $50,000 for small business borrowers in declared disaster areas.
- Contact IBank by email.
California Capital Access Program (CalCAP) (1-500 employees)
- CalCAP is a loan loss reserve program which may provide up to 100% coverage on losses as a result of certain loan defaults. Individual borrowers are limited to a maximum of $2.5 million enrolled over a 3-year period. Contact a Participating Lender to enroll.
- To contact the California State Treasurer’s Office:
- Email CalCAP
- Call: 916-653-2995
Cal-OSBA – Small Business Assistance & Resources
- California’s network of small business support centers help businesses figure out which loans are best for them, develop resiliency strategies, and find other resources. Click here to learn more.
- If you need to talk to a specialist in GO-Biz’s Office of the Small Business Advocate directly, please contact the team.
- Click here for a list of free or discounted technology tools for small businesses.
California Entrepreneurship Task Force
- The California Entrepreneurship Task Force has launched a series of Rapid Response Virtual Sessions to engage with fellow small business owners and entrepreneurs across our state. More details here.
L.A. CARES Corps
L.A. CARES Corps is a partnership between the City and County of Los Angeles to provide small businesses with the help they need to apply for federal loans under the CARES Act.
Small business owners can find a clear explanation of the emergency loan programs and access applications on the L.A. CARES Corps website. There is also a dedicated call center at (833) 238-4450, where SBA trained counselors can offer live assistance in completing applications.
L.A. COVID-19 Relief Fund
In response to the devastating effects that COVID-19 is having on the local economy, the County of Los Angeles and the City of Los Angeles, in partnership with institutional and corporate philanthropy, have come together to create the LA Regional COVID-19 Recovery Fund. The regional fund will offer loan and grant resources to micro-entrepreneurs, small businesses, and non-profits. Click here for more information and to apply.
Small Business Microloan Program
The City of Los Angeles launched the Small Business Emergency Microloan Program, which includes $11 million in financing to help strengthen local businesses affected by the coronavirus outbreak. Eligible businesses can apply for no-fee loans between $5,000 to $20,000 to cover vital expenses that will allow them to continue operating during the current crisis.
To find out if your business qualifies for a microloan, click here.
Explore the Controller’s Small Business Emergency Microloan Program Tracker below or here.