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HPA Resource Guide During COVID-19

HPA Resource Guide
March 23, 2020 By Cate LeSourd

Over the last couple weeks, HPA has been working diligently to build a resource guide with aggregated content. As an organization, we hope to help keep you informed on the latest news with how COVID-19 is affecting our nation and the marketplace.

As we all navigate this unprecedented time, we wanted to equip you with helpful information and important resources as it relates to your business. Check out the full resource guide below (and subscribe to our newsletter if you haven’t already).

Last updated: May 4, 2020

Quick Resource Guide Links:

Business, Loan and Financial:

Operational:

State and Health:

Startup Ecosystem:

  • Chicago Proactive Response: Chicago’s leading innovation centers, 1871, mHUB and MATTER, are working together in light of the current events. They are collaborating to mobilize leaders and generate solutions within the tech ecosystem.
  • Learn more and join the fight against COVID-19 at CPR-Covid19.com.

Below outlines more detailed information on state and federal loan assistance and relief packages.

Updated SBA Loan Application

As of April 3, the U.S. Treasury and the Small Business Administration (SBA) released a new loan application. Notably, the updated loan addresses the challenges of certification from the original application and has additional improvements. Further guidance on affiliation rules is still forthcoming. We will update as information is released. As of April 7, the Treasury Department and SBA updated the affiliation rules and released important guidance about the Paycheck Protection Program (PPP). Because of the advocacy from NCVCA, this guidance provides helpful information about the obligations of venture-backed companies, improving the position of the startup ecosystem. The NVCA developed a guide to the PPP and analysis of the applicable affiliation rules.

Update: As of April 21, the Senate passed a bill providing an additional $310B in funding for PPP loans. The bill still needs to be passed by the House of Representatives and signed into law by the President, but we’ll provide an update once news is shared.  

Review Fit Small Business’ list of the top SBA lenders for insight into choosing an SBA lender.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act

The CARES Act, which was signed into law on Friday, 3/27, allocates $350B to help small businesses keep workers employed in the midst of the pandemic and economic downturn.

This initiative, known as the Paycheck Protection Program (PPP), provides 100% federally guaranteed loans to small businesses who maintain their payroll amid this emergency. Notably, a portion of these loans may be forgiven if companies maintain their payrolls during the time of crisis.

The CARES Act also created tax deferment and tax credit programs for payment taxes for businesses that don’t take advantage of PPP.

To learn more, the U.S. Chamber of Commerce compiled an interactive map to learn how aid can help small businesses in each state. More information will be released soon on how to apply. In the meantime, please review this guide to help you understand eligibility and prepare to apply for this loan.

SBA Disaster Loan Assistance

The Small Business Administration is providing federal disaster loans with access up to $2M in capital. If you anticipate any economic impacts on your business from COVID-19, you should apply. In other words, if you foresee an inability to transact business, close new deals, produce and distribute products or services, etc.

Furthermore, these loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere. Businesses with credit available elsewhere are not eligible. Read the overview of disaster loans for more context. 

Additionally, Congress continues the process of evaluating and discussing aid packages that will set aside additional funds for SBA disaster loans. 

The SBA compiled resources and information to equip small businesses to navigate the current economic landscape. For these resources, learn more. 

Contact information for businesses in IL:

  • Chicago Office: 312-353-4528 
  • Springfield Branch: 217-747-8249
  • Email: Illinois.DO@sba.gov
  • Bo Steiner, District Director for the U.S. Small Business Administration’s Illinois District Office <robert.steiner@sba.gov>

COVID-19 Aid Package

On March 18, Trump signed a $100B aid package to respond to COVID-19. It primarily focuses on help for employees and individuals, including:

  • Required paid leave: The bill requires businesses with <500 employees to offer up to 2 weeks of paid sick or emergency leave for virus-related illnesses. It also includes an additional 10 days at 2/3 pay. Businesses smaller than 50 employees will likely be exempted.
  • Tax credits for paid leave: The bill gives tax credits for wages paid for employees on sick leave. It will be applied against the employer portion of Social Security tax credits.
  • Unemployment benefit changes: The bill makes it easy for states to extend unemployment benefits beyond 6 months, making layoffs more expensive.

We anticipate there could be more aid packages coming. We’ll update this resource guide as necessary.

Chicago Small Business Resiliency Loan Fund

Mayor Lori Lightfoot announced on 3/19 that the city of Chicago is introducing a Chicago small business resiliency loan fund. The $100M fund will provide low-interest loans of up to $50,000 to severely impacted small businesses.

To be eligible, businesses must meet the following requirements:

  • Suffered more than 25% revenue decrease due to COVID-19
  • Employ fewer than 50 employees and have gross revenues of less than $3 million in 2019
  • Provide a city business address or city business license
  • No pre-existing tax liens or legal judgments

In addition, be prepared to provide the following information:

  • Bank statements dating back to October 2019
  • Most recent tax return
  • Photo ID (CityKey will be accepted)

Breakdown: Coronavirus Tax Breaks for US Citizens

The Accounting Institute for Success developed a helpful resource that highlights the new deadlines and provides a state-by-state breakdown of the updates for tax breaks. Additionally, the American Institute of Certified Public Accountants (AICPA) assembled a large document of information, including each state’s department of revenue, which will be regularly updated.

Tax Update – Delay of Federal Payment

On 3/17, the IRS issued guidance regarding a tax-payment delay. Per Notice 2020-17, individuals, estates and trusts can defer up to one million dollars of federal income tax payments until July 15. Corporations can defer up to 10 million dollars of payments. Important to note, this deferral applies to a taxpayer’s 2019 tax liability and 2020 first quarter estimated tax payment.

Note, this is not an automatic extension. Taxpayers will have to complete their returns or file an extension before April 15th filing date in order to qualify for the payment deferral. 

Many states are also deferring payment. The AICPA is updating its state guidance daily. Find details for your state here.

Honeycomb Credit Small Business Loan

Honeycomb Credit is offering community-sourced loans for small businesses impacted by COVID-19. In order to help deliver the working capital, Honeycomb is offering 45-day payment free periods with 6-month interest-only periods.

As a result, the company is reducing their posting, success and investor fees. Additionally, they are aiming to connect businesses with local investors as quickly as possible. These loans will be community funded via the Honeycomb crowdfunding platform. Learn more about this loan here.

U.S. Federal Reserve Programs for Economic Relief

On 3/23, the U.S. Federal Reserve shared that steps would be taken to combat against the economic disruptions. 

These plans include the establishment of new programs to issue US government-backed loans to small businesses. Additionally, there will be measures to backstop credit for households, small businesses and major employers, including lending against student and credit card loans. Stay tuned for updates because these initiatives are still being finalized.

Resource Guide Updates

We will continue to update this resource guide as we learn of additional opportunities and information. If you have information or resources to add to this resource guide, contact us. Above all, HPA is a resource for you in this stressful time filled with uncertainty.

We are closely monitoring COVID-19 and how it affects our portfolio companies, members and partners. With that said, we’re happy to put together additional resources. We are also available to discuss business needs and the state of the market, so please don’t hesitate to reach out.

Stay healthy,

The HPA Team