Coronavirus Impact Relief Coming to Small Businesses

Published: March 19, 2020

Federal Market AnalysisCONGRESSCoronavirus (COVID-19) PandemicPolicy and LegislationSmall BusinessSBA

The White House, Congress and the Small Business Administration are rapidly taking steps to aid small businesses impacted by the COVID-19 pandemic.

Key Takeaways

  • Congress has given the Small Business Administration $20 million for Disaster Relief Loans in the recently passed Coronavirus Preparedness and Response Supplemental Appropriations Act.
  • Eligible SBA loan entities include small businesses and private, non-profit organizations without credit available elsewhere, i.e. these loans are only for firms without available credit lines. Loans may be up to $2 million and up to a 30-year term, with interest rates below 4%.
  • Individual state and territorial governors must request SBA loan assistance be made available.
  • The Senate Committee on Small Business and Entrepreneurship and others are proposing an additional $300 billion in small business assistance, including provisions for new grant programs to cover the payroll expense of impacted small businesses.

SBA Economic Injury Disaster Loans

The Small Business Administration (SBA) has been provided $20 million under the Disaster Loans Program Account in the recently passed Coronavirus Preparedness and Response Supplemental Appropriations Act. The SBA news release stated that the loans will be “low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19).”

General parameters of these loans include:

  • Small businesses and private, non-profit organizations without credit available elsewhere are eligible; those with credit available elsewhere are not eligible
  • Loans of up to $2 million and up to a 30-year term
  • The interest rates are 3.75% for small businesses and 2.75% for non-profits
  • Loans may be used to pay fixed debts, payroll, accounts payable and other bills that cannot be paid because of the disaster’s impact.

Once a state’s or territory’s governor makes a request for such assistance SBA will issue an Economic Injury Disaster Loan declaration, upon which small businesses in that state may apply directly to the SBA for Disaster Loan Assistance.

The current list of eligible states is expanding and will likely continue to expand, so be sure to check out site linked above for the latest list. Additional information is available on the SBA’s Coronavirus (COVID-19) information Web site and at the SBA’s Coronavirus (COVID-19): Small Business Guidance & Loan Resources site.

Small Business Aid Legislation in the Works

The Senate is also busy drafting proposals to provide further aid to U.S. small businesses. The Restoring Economic Security, Confidence and User Endurance (RESCUE) Businesses Act of 2020 is a $300 billion small business emergency economic relief package sponsored by Senator Marco Rubio (R-FL), Chairman of the Senate Committee on Small Business and Entrepreneurship, and Senator Susan Collins (R-ME), a senior member of the Senate Appropriations Committee and the Senate Health Committee. One possible provision could be to that these loans would be transformed into outright grants if the funds are used to make payroll and cover customary business expenses.

For their part, Democrats on the Senate Small Business Committee are proposing the COVID-19 RELIEF for Small Businesses Act of 2020. The bill will propose creating a new grant program to award up to $50,000 to small businesses of between two and 50 employees that can demonstrate losses of at least 50 percent for a minimum of one month due to the outbreak.

Both bills are in their very early stages and will likely morph as both parties come together to pass common priorities. Stay tuned.


So far, most of the assistance efforts are focused on the most vulnerable small businesses in the national economy – those with a small workforce and those without access to credit otherwise who have suffered immediate and wide-ranging impacts. Within the government marketspace this could include small services firms and recent start-ups. Expect imminent action to aid these firms, hopefully with a limited number of administrative hoops through which to jump.

However, as Congress and the Trump Administration continue to work their way out from the subset of the most immediately impacted and vulnerable firms to address those whose impediments may be slightly less immediate, we should likely expect additional provisions to come down the pike to aid those firms as well.