WASHINGTON—U.S. Small businesses hurt by the COVID-19 outbreak will be able to receive up to $2 million in disaster assistance loans as part of the economic relief package offered by President Donald Trump.
In his address to the nation on March 11, Trump said he instructed the Small Business Administration (SBA), a government agency, to “provide capital and liquidity to firms affected by the coronavirus.”
He called on Congress to increase funding for the SBA program by an additional $50 billion.
“These low-interest loans will help small businesses overcome temporary economic disruptions caused by the virus,” Trump said.
The president has also offered tax deferral for individuals and businesses impacted by the health crisis.
“Using emergency authority, I will be instructing the Treasury Department to defer tax payments, without interest or penalties, for certain individuals and businesses negatively impacted,” Trump said.
Deferring taxes, he said, would inject more than $200 billion of liquidity to the economy.
The tax deadline falls on the traditional April 15 due date. As of this writing, the Treasury and the IRS have not issued a formal announcement on the deferral.
The president also urged Congress to pass “immediate payroll tax relief.”
The SBA announced on March 12 that it began to offer federal disaster loans up to $2 million to small businesses “in designated areas of a state or territory.”
“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 SBA said in a statement. “The interest rate is 3.75 percent for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75 percent.”
The payment term for these loans will be up to 30 years and determined on a case-by-case basis, depending on a firm’s ability to repay, according to the agency.
“The President took bold, decisive action to make our 30 million small businesses more resilient to Coronavirus-related economic disruptions,” SBA Administrator Jovita Carranza said in a statement.
In addition to this financial relief, the agency will provide counseling on “preparedness plans” through its 68 district offices and resource partners.
“I do think giving businesses some support is necessary,” said Sean Pour, co-founder of Sellmax, a small business that provides a car-buying service based in San Diego, California.
“Imagine having to make a $5,000 to $20,000 a month payment without any profit coming in. You will quickly be upside down,” he told The Epoch Times.
Pour, who employs about 38 people, asked his staff to work from home.
“We have to primarily wait for the governments to get this sorted out. The most we can do is to protect our team.”
Small businesses throughout the country have begun feeling the effects of the outbreak.
The Virus Has ‘Wreaked Havoc’
Natasha Miller is the founder and CEO of Entire Productions, an event and entertainment production company based in San Francisco. She serves big technology companies like Google, Apple, and Uber.
“The COVID-19 virus has wreaked havoc on our entire industry,” Miller told The Epoch Times.
Her business has lost more than $100,000 as events are canceled or postponed. She expects the business to decline by 50 percent this year.
“We’re cutting all non-essential expenses, including our WeWork offices. I’m reducing my salary by half, and we’re laying off five employees in response to the lost business,” she said.
Coral Sisk, director and tour guide of a small culinary tour business specializing in Italy, has been severely impacted by the outbreak. Her small business focuses on cooking activities and walking tours in Florence and Bologna, and wine tours around Tuscany.
“My business went from healthy to hammered-shut overnight, with a wave of e-mails to follow, requesting cancellations and refunds,” Sisk told The Epoch Times. “I’ve lost 3 months of an already limited window of months in which we generate revenue, which is meant to last us year long.”
She believes the government should provide tax breaks to lighten the burden for small businesses and subsidies to help cover their costs.
And some small businesses, such as Psi Health Solutions, Inc. have been affected by shortages of supplies coming out of China.
“Our manufacturer was shut down during Chinese New Year,” Romy Taormina, CEO and founder of Psi, told The Epoch Times.
“The factory was delayed in opening by two weeks. And while they have re-opened, they are operating at 25 percent capacity.”
The company sells medical devices for the relief of nausea due to morning sickness, motion sickness, chemotherapy, and anesthesia. It was planning to expand into Target stores this spring.
“With the coronavirus and the manufacturer’s shut-down and reduced capacity, our Target expansion will be delayed,” Taormina said.