COVID-19 Disaster Relief for Florida Businesses

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We are working to help our clients and small businesses sort through this difficult time. We have been studying the changing legislative landscape — here’s our latest summary of programs available to assist small businesses.

Three Programs Available to Florida Businesses

There are at least three programs available to Florida business owners at this time — the Florida Small Business Emergency Bridge Loan, the SBA’s Economic Injury Disaster Loan (EIDL) program, and the newly-enacted Paycheck Protection Program (PPP), which is part of last week’s Coronavirus Aid, Relief, and Economic Security Act (CARES ACT). Here’s a brief discussion of each, with links to application resources and further information.

Florida Disaster Loan

The Florida Small Business Emergency Bridge Loan program provides Florida businesses with up to a $50,000 bridge loan in the event of a disaster, and COVID-19 is considered an eligible disaster. The loan is available to businesses with 2-100 employees.

Pros:

  • This is a no-interest loan, and it can be issued very quickly.

    • Cons:

  • Repayment starts right away. If you accept this bridge loan, the first payment will be due 30 days after you take the funds (and if you take the full $50,000, the payment would be $4,200 a month).
  • After one year interest free, the interest rate jumps to 12% per annum.

    • You may be able to pay off this loan using the proceeds of the EIDL or Paycheck Protection Program loan described below to convert this short term loan into a longer term. But be sure you will be in a position to start repayment in the first month after the money is disbursed. For application information, please go to the FloridaDisasterLoan.org website.

    SBA (EIDL) Loan

    The Federal Economic Injury Disaster Loan (EIDL) Program provides loans for businesses with fewer than 500 employees, and is available to sole proprietorships as well as business entities.

    Pros:

  • Longstanding program with clear guidelines.
  • First payment due in 12 months, and the loan is long-term (up to 30 years fixed) with no pre-payment penalty.
  • You can borrow up to $25,000 unsecured, and more if you have security.
  • The goal of this program is to allow you to spread the costs of this short term disaster over the life of your business.
  • May receive up to a $10,000 advance while application is pending.

    • Cons:

  • At this time, there is no loan forgiveness in place (Congress would need to enact further legislation to allow for forgiveness, and that is not currently in place and not something that can be counted on).
  • If you have collateral, you will be required to give the SBA a lien on that property.
  • If you take an EIDL loan for damage caused by COVID, you are not eligible to participate in the PPP program enacted as part of the CARES ACT.

    • The SBA loan officer will determine amount you may borrow based upon your fixed expenses as shown in the application materials. Current processing time is 18-27 days and is subject to change. The main application page is https://covid19relief.sba.gov/#/

    Federal CARES ACT Loan -Paycheck Protection Program (PPP)

    This is the newest program being made available, approved by Congress and signed by the President on Friday, March 27, 2020. The SBA has 30 days from Friday to issue further guidance on how these loans will work. These loans will be issued by banks and will have the potential for forgiveness/to be converted into non-taxable grants, They are intended to cover expenses dating from February 15, 2020 through June 30 2020.

    Pros:

    No collateral required.

  • May be converted to a grant if you meet the criteria to do so and your application for forgiveness is approves.
  • May have up to a 10 year repayment term with interest no higher than 4% for the life of the loan with no pre-payment penalty.
  • May borrow up to 2.5 times average monthly costs of payroll, mortgage interest, rent and utilities for the business.

    • Cons:

  • Cannot apply yet so it is not clear how long it will take to obtain the funds.
  • We don’t yet know the full criteria for requesting forgiveness — watch deadlines carefully.
  • If you took an EIDL loan, you are not eligible to take a PPP loan (you should, however, apply for an EIDL loan while waiting to find out more about PPP if you need the money no matter what. You can decline the EIDL in favor of PPP when the time comes).

    • Application Tips:

  • If you owe back taxes or child support, make sure you have an approved repayment plan or you cannot be approved. If you need a referral to a tax practitioner to help you get a plan, contact us.
  • Turnaround times are right now 18-21 days for the SBA programs. Make sure your application is complete before you upload it.
  • Web traffic and call volume are high. Consider calling in the middle of the night (2-3am) to get a better chance to get through.
  • You do not have to accept loan monies offered, but you should keep your options open. The SBA is currently recommending that businesses apply for both EIDL and PPP and decide which to take once they get packages offered.

    • We have created a downloadable resource to help you prepare an EIDL application. The download contains .pdfs of the forms required to apply, along with screenshots of the online application so you can gather the information in advance. Click here to download EIDL Application Guidance. This link expires on March 6, 2020, so act today.

    Call our office at 813-778-5161 if we can be of further assistance, including connecting you to other helpful resources.