Small Businesses, Employers and COVID-19
FOR SMALL BUSINESS OWNERS:
We suggest you visit the U.S. Small Business Administration webpage for further guidance on accessing all resources. You can view the Economic Injury Disaster Loan Program for those affected by the coronavirus outbreak, which you can apply for HERE.
This Small Business Owner’s Guide to the CARES Act provides information about the major programs and initiatives that are available from the Small Business Administration (SBA) to address these needs, as well as some additional tax provisions that are outside the scope of SBA.
The Paycheck Protection Program:
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. The 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.
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. Loans issued prior to June 5 have a maturity of 2 years. Loans issued after June 5 have a maturity of 5 years. All loans have an interest rate of 1%.
The following entities affected by Coronavirus (COVID-19) may be eligible:
- Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors, and self-employed persons
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. Consult with your local lender as to whether it is participating in the program.
The program will close on June 30. To apply for the Paycheck Protection Program, find a local lender still accepting applications by using the SBA's tool, HERE, and download a copy of the PPP borrower application form (Spanish version) to see the information that will be requested from you when you apply with a lender.
WHAT CAN I DO IF MY BUSINESS HAS SLOWED DUE TO COVID-19?
If COVID-19 has impacted your business or services, you can avoid potential layoffs by participating in the Unemployment Insurance (UI) Work Sharing Program. This program allows you to retain your workers, but offset any wage reduction with UI benefits. Hours and wages must be reduced by no more than 60%. This helps you avoid the cost of recruiting, hiring, and training new workers and helps your workers keep their jobs and receive additional financial support. You and your workers can also be prepared to quickly adjust when business improves.
WHAT IF I HAVE TO LET GO OF SOME OF MY WORKERS TEMPORARILY UNTIL BUSINESS IMPROVES?
Your workers can file for unemployment benefits as long as they are unemployed and otherwise eligible. Workers who expect to return to work for you within a few weeks are not required to actively seek work each week as long as they are able and available to return to work during their unemployment and meet all other eligibility criteria. The Employment Development Department (EDD) will explain the requirements to your workers when they apply for benefits.
WHAT CAN I DO IF I AM CONSIDERING SHUTTING DOWN MY BUSINESS PERMANENTLY?
If you are facing potential layoffs or closures, you can get help through the Rapid Response program. Rapid Response teams will meet with you to discuss your needs, help avoid layoffs where possible, and support your workers through the process. Services can include upgrades to current worker skills, customized training, career counseling, job search assistance, help with filing unemployment insurance claims, and information about education and training opportunities. For more information and to get started, contact your local America’s Job Center of California for more information about available Rapid Response services.
WHAT IF I CAN'T FILE OR PAY MY PAYROLL TAXES ON TIME BECAUSE OF COVID-19?
With the Governor’s emergency declaration, if your business is directly affected by COVID-19, you can request up to a 60-day extension to file your state payroll reports and deposit state payroll taxes without penalty or interest. The written request for extension, noting the impact of COVID-19, must be received within 60 days from the original delinquent date of the payment or return.
WHAT CAN I DO TO PROTECT MY WORKERS FROM COVID-19?
Only businesses within the Essential Critical Infrastructure should remain open at this point. The Centers for Disease Control and Prevention Guidance for Business and Employers includes basic precautions like proper handwashing and cleaning, as well as making sure your sick leave policies are flexible and consistent with public health guidance. Visit Cal/OSHA Guidance on Coronavirus to learn more about workplace requirements.