Recently Announced State and Local Economic Relief Packages To Help Small Businesses and Workers Affected By COVID-19
March 26, 2020
The federal government is close to enacting a stimulus package to address the economic impact of the Coronavirus pandemic. Many states and local jurisdictions have also announced their own economic stimulus packages intended to help small businesses and workers affected by the Coronavirus pandemic.
Notably, the State of Maryland; Montgomery County, Maryland; and the District of Columbia have all enacted some form of relief for entities impacted by the pandemic.
The following discussion sets forth basic information about the various economic stimulus packages in an effort to help identify clients that qualify for assistance and enable them to take advantage of the available programs.
Maryland Economic Relief Package
On Monday, March 23, Governor Hogan announced the availability of more than $175 million to help small businesses and workers affected by the Coronavirus pandemic.
Of this $175 million in aid, $125 million has been set aside to be distributed as grants ($50 million) and loans ($75 million) to small businesses and non-profit organizations through the “Maryland Small Business COVID-19 Emergency Relief Fund.”
Businesses and non-profit organizations with annual revenues of $5 million or less, may be eligible to receive grants of up to $10,000.
Specifically, eligible entities may apply to receive a grant from the State of Maryland equal to the lesser of: (i) $10,000; or (ii) the grantee’s need for 3 months of cash operating expenses.
Qualifying entities may apply to borrow up to $50,000 in no / low interest rate loans from the state.
The Maryland COVID-19 emergency relief loans are structured as 0% interest with no payments for the first 12 months, and 2% per annum for the balance of the loan (total loan terms of up to 36 months are available).
Although these loans have no collateral requirements, in addition to various other requirements, the borrower must have a minimum credit score of 575.
Eligibility Requirements for Grants and Loans
Eligibility for the grants or loans relief is limited to Maryland businesses and non-profit organizations that:
- were established prior to March 9, 2020;
- have less than 50 full and part-time employees;
- have employees with respect to whom they withhold payroll taxes; and
- need the requested funds for working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of business.
In addition to these broad-based programs, Maryland has two smaller, more targeted initiatives designed to address COVID-19 economic disruptions. The Maryland Layoff Aversion Fund will provide Maryland employers with up to $50,000 to help them pay for employee remote access equipment (ex. computers, printers, telephones, etc.); and the Maryland COVID-19 Emergency Relief Manufacturing Fund to assist Maryland-based manufacturers (of any size) with the production of personal protective equipment for hospitals and health care workers.
Clients can apply for loans and grants on the “Maryland Small Business COVID-19 Emergency Relief Fund” website by visiting: https://commerce.maryland.gov/fund/maryland-small-business-covid-19-emergency-relief-fund-programs
For assistance in accessing such website, please contact us at 301-564-3636.
Montgomery County, Maryland Relief Package
Montgomery County, Maryland lawmakers are considering a proposal to provide $25 million in grant funding for local businesses and non-profit organizations.
Under the proposal, local businesses and non-profits (i.e., those entities with 100 or fewer full-time employees) may be eligible to receive up to $75,000 in grant funds if they are able to demonstrate financial losses caused by the Coronavirus pandemic.
Although it has yet to be formally approved by the Montgomery County Council, the relief package is scheduled for a March 31st vote and it is expected to be approved.
District of Columbia Relief Package
The District of Columbia has adopted legislation identical to the grant proposal being considered in Montgomery County, Maryland, i.e., up to $75,000 in grant funds available to entities with 100 or fewer full-time employees.
In addition to the availability of grants, the District of Columbia City Council’s relief package also (1) postpones the due date of sales taxes (which are ordinarily due on the 20th of each month) until September 20, 2020; and (2) delays the real property tax payment for hotels from March 31st until June 30, 2020.
For more information, please visit – https://coronavirus.dc.gov/dc-small-business-recovery-grants. For assistance in accessing such website, please contact us at 301-564-3636.
Federal Small Business Administration (SBA) Economic Injury Loan Program
In addition to the relief packages being provided by the separate jurisdictions, the State of Maryland, the District of Columbia, and the Commonwealth of Virginia have all been officially designated for federal assistance under the Small Business Administration (“SBA”) Economic Injury Disaster Loan Program due to the impact of the Coronavirus pandemic.
As a result of this designation, Maryland, DC, and Virginia businesses may apply directly to the SBA for up to $2 million of low-interest (3.75%) loan assistance. The interest rate for nonprofits is 2.75%.
Although SBA loans have with long-term repayments – up to 30 years, which are designed to keep payments affordable, eligibility for the loans is limited to businesses that cannot obtain credit from other banks or financial institutions. Businesses that have such other means of credit are not eligible for this program. The actual terms of such loans are determined on a case-by-case basis, and is predicated, in part, on the borrower’s ability to repay the approved loan amount.
The proceeds of these loans may be used by borrowers to pay fixed debts, payroll, accounts payable, and other expenses it is unable to meet due to the impact the Coronavirus has had on business.
Additional information about, and applications for, SBA loan assistance, visit: https://disasterloan.sba.gov/ela/. For assistance in accessing such website, please contact us at 301-564-3636.