COVID-19: Small Business Resources

State Resources

Illinois Small Business Emergency Loan Fund. The Illinois Department of Commerce and Economic Opportunity and the Illinois Department of Financial and Professional Regulation are establishing the Illinois Small Business Emergency Loan Fund to offer small businesses low interest loans of up to $50,000. Businesses located outside of the City of Chicago with fewer than 50 workers and less than $3 million in revenue in 2019 will be eligible to apply. Successful applicants will owe nothing for six months and will then begin making fixed payments at a below market interest rate for the remainder of a five-year loan term. Interested businesses may be able to pursue this after March 27 by completing the form at the link above.

Downstate Small Business Stabilization Program. DCEO is repurposing $20 million in CDBG funds for the Downstate Small Business Stabilization Program. This Fund will offer small businesses of up to 50 employees the opportunity to partner with their local governments to obtain grants of up to $25,000 in working capital.

Local governments can apply on behalf of businesses with 50 employees or less. Only units of local government recognized by the Illinois Constitution and able to support economic development activities on a sufficient scale are eligible to apply for Economic Development grant funding. This includes cities, villages, and counties. Municipalities must not be a HUD direct Entitlement community or be located in an urban county that receives “entitlement” funds. Businesses in the eligible areas should work with their local governments to submit applications. Application materials will be posted to the DCEO website on Friday, March 27, 2020.

Federal Resources

HR 6201 The Families First Coronavirus Response Act provides paid sick leave and expands FMLA protections but provides a payroll tax credit. The U.S. Department of Labor has published guidance here to employees and employers about how each will be able to take advantage of the protections and relief offered when it goes into effect on April 1, 2020.

HR 748 The Coronavirus Aid, Relief, and Economic Security Act (CARES) is the most recent legislation that includes several things that may be of interest to lawyers and law firms.

Unemployment insurance. Creates the Pandemic Unemployment Assistance Program to provide federal unemployment coverage for individuals traditionally not eligible for UI such as self-employed and independent contractors. It will be available through December 31, 2020 to assist individuals unable to work because of COVID-19. It provides an additional $600 per week to individuals receiving UI or payments under the temporary program up to four months. Individuals who have exhausted state and federal unemployment benefits are eligible for an additional 13 weeks of federal benefits. A more detailed analysis may be found here.

Paycheck Protection Program. This provides a $350 billion fund to provide loans to small businesses and 501(c)(3) corporations that have fewer than 500 employees and sole proprietors, independent contractors, and self-employed. Amounts used to cover payroll costs, mortgage interest payments, rent, and utility bills over an eight-week period will be forgiven if the business retains its employees. Forgiveness is reserved for employers that maintain payroll continuity from Feb. 15, 2020 until June 30, 2020. Individuals who have received an SBA Economic Injury Disaster loan may refinance into this new program.

Payroll tax credit. Provides a refundable payroll tax credit for businesses equal to 50% of wages (up to $10,000 per employee) paid during the COVID-19 pandemic. Businesses are not eligible for the credit if loans are forgiven under the Paycheck Protection Program.

IRAs. Waives the 10% early withdrawal penalty for distributions from qualified IRAs (up to $100,000) to cover COVID-19 related expenses. The bill waives the 10% early withdrawal penalty for distributions up to $100,000 for coronavirus-related purposes, retroactive to Jan. 1 for individuals under 59 ½. Taxpayers can also spread the distributions over three years and if repaid within those three years, no income tax would be paid on the distribution. The Act also increases loan amounts that can be taken against retirement accounts to $100,000. It also waives the required minimum distribution rules for IRAs, 401(k)s and certain other retirement plans for 2020.

Payroll tax deferral. Employers can also defer 100% of the payment on their 6.2% share of Social Security tax through December 31, 2020 until December 21, 2021 (50%) and December 31, 2022 (50%).

The Small Business Owner’s Guide to the CARES Act from the U.S. Senate Committee on Business and Entrepreneurship is also available online.