Three Financial Relief Sources Explained

By: MADISON DAVIS, President/CEO, Brisbane Chamber of Commerce, madison@brisbanechamber.org, 415-467-7283

At the Brisbane Chamber of Commerce we have been working hard with the San Mateo County Economic Development Association to bring you the resources you need to navigate this challenging time. Make sure to add news@brisbanechamber.org to your approved contacts so you don’t miss any of our emails.
We have heard from some businesses that wading through all of the information regarding financial resources is daunting. How should one choose what to apply for? What are the differences in programs and loans offered? In order to help you, we have streamlined our recommendations to focus on three programs.
SMC Strong Fund:
The SMC Strong Fund, established by the San Mateo County Board of Supervisors aims to provide financial relief to small businesses, non-profits, and SMC residents who have experienced a loss of income due to COVID-19. Awards of up to $10,000 will be made in the form of grants and do not need to be repaid. The fund, seeded by $3 million from the Board of Supervisors, has grown to over $4 million in funds from over 600 individual donors and corporations and continues to grow each day. The San Mateo Credit Union will be partnering with the Board of Supervisors to develop an application and distribution process likely to be available in late April. For those who don’t qualify, San Mateo Credit Union will work with
those individuals or businesses to connect them with other programs they may be eligible for. For additional information visit: smcstrong.org
Paycheck Protection Program:
The Paycheck Protection Program is the Small Business Administration’s $349 billion lending
program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Paycheck Protection Program expands the SBA’s 7(a) loan program to help small businesses cover their near-term operating expenses and retain employees. This program has the capacity to provide some of the best relief for businesses. If at least 75% of the loan is used for payroll, the full loan amount will be forgiven. 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. For the unforgiven loan amount, the borrower has 2 years to repay and the first payment must be made after 6 months after the loan origination date.
Small businesses with 500 or fewer employees—including nonprofits, veterans organizations, tribal concerns, self-employed individuals, sole proprietorships, and independent contractors— are eligible. Businesses with more than 500 employees are eligible in certain industries. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees. Loans will be made directly with banks so we urge you to reach out to a lender. The Paycheck Protection Program can cover expenses such as payroll, sick leave, insurance, rent, mortgage, utilities, and interest on existing debt.
Economic Injury Disaster\Assistance Loan (EIDL):
Offered by the Small Business Association, the EIDL program allows companies to receive loans to cover injury as a result of a disaster with low interest rates. Compared to the PPP, EIDL provides for more flexibility on what the funds may be used for. These loans allow for up to a $10,000 cash advance after the application is submitted while the borrower is awaiting the remainder of the loan amount. If the borrower is denied, the $10,000 advance will become a grant and will not need to be repaid. If the loan is approved, the $10,000 advance will be get rolled into the overall loan amount and be charged interest. An EIDL can provide up to $2 million in financial assistance. The loans help businesses and non-profits meet financial obligations and ensure they have enough working capital.
Interest rates of an EIDL are 3.75% for Small Businesses and 2.75% for non-profits. There are no upfront fees or early payment penalties charged by SBA. The repayment term (up to 30 years) will be determined by your ability to repay the loan. The first payment on the loan is required one year after the loan origination date.
Key Takeaways:
If you qualify for the SMC Fund and your business has been impacted by COVID-19, apply for a grant as there is no risk. If you need help maintaining Payroll consider applying for PPP. If your business can follow the guidelines, loans will be forgiven. If your business needs working capital and requires funding that allows for flexibility, consider an Economy Injury Disaster Assistance Loan (EIDL).
*This article is meant for informative purposes only. All businesses are encouraged to research financial resources on their own and verify information with their lender or the SBA. These programs are changing daily and terms outlined here may change at any time.