Access to liquidity, supply chain disruptions and strains on inventory could also become frequent problems over the next several weeks. In response, federal, state and local governments have announced plans to offer relief packages designed to assist small business owners and workers. We have summarized a number of these initiatives below and will provide periodic updates as new programs and further details are announced.
- The United States Small Business Administration (“SBA”) has announced that loans of up to $2.0 million may be available to qualified small businesses under its Economic Injury Disaster Loan program, which offers low-interest loans to small businesses impacted by disasters such as the COVID-19 outbreak. The loans can be used to pay fixed debts, payroll, accounts payable and other obligations that can’t otherwise be met due to the COVID-19 outbreak. The interest rate on these loans is fixed at 3.75%. The SBA offers an online tool to help businesses determine whether they are “small” enough to qualify. In addition, to be considered for a Disaster Loan, the impacted business must be located within a designated disaster area for which the state Governor has requested federal assistance. A listing of currently declared disasters can be found here, and is being updated frequently as additional areas are added to the list.
- The State of New Jersey has announced that it is considering a relief package that is expected to be voted on this week. Some of the proposals reportedly under consideration include requiring insurance carriers provide coverage for business interruption, even if policies include “virus” exclusions, and allowing the New Jersey Economic Development Authority (“NJEDA”) to provide zero-interest, short-term loans to help businesses make payroll. In the meantime, the NJEDA offers a variety of financing and incentive programs for small and medium businesses, which are discussed on the NJDEA website.
- The City of Philadelphia issued an announcement on March 16, 2020 relating to new restrictions on business activities within the City, including the shutdown of non-essential businesses and restrictions on restaurants. The City and
PIDC also announced that they intend to launch a program to support Philadelphia businesses, help maintain payroll obligation, and preserve jobs impacted by the spread of COVID-19. The program, which is currently under development, is described as a tiered program that aims to provide targeted support for small businesses. The program is expected to include a mix of new grants and zero-interest loans for Philadelphia businesses that make under $5 million in annual revenue. PIDC has solicited information from impacted businesses through an online survey, located here. Additional details on the PIDC program are expected within the next few days.
The Coronavirus Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID-19 situation develops.
Author Matthew M. McDonald is a partner in the Corporate & Securities Department at Klehr Harrison. Author Travis Dunkelberger is an associate in the Litigation Department at Klehr Harrison.