Grant, loan programs available for COVID-impacted businesses

Various state and federal stabilization programs have been made available to small businesses in light of the coronavirus (COVID-19) pandemic. Several target small businesses, and the parameters appear to pertain to horseracing participants such as trainers, owners and farm owners.

Under a March 23 executive order from Maryland Gov. Larry Hogan, horse care, boarding facilities and other operations that provide self-care for privately-owned horses—stable areas and training centers—are considered essential businesses and should continue operations while implementing safety measures that promote social distancing and other best practices.

The following is an outline of some of the financial stabilization programs, though each business through tax advisers and bookkeepers must determine whether it qualifies for relief.

Hogan recently announced two programs: one for loans and the other for grants.

The COVID-19 Emergency Relief $75 Million Loan Fund offers working capital to assist Maryland for-profit small businesses disrupted operations due to COVID-19. Loan assistance is intended to provide interim relief complementing actions with its bank, business interruption insurance, and financial partners.

The program offers the following:

  • Loans up to $50,000 (not to exceed three months of cash operating expenses) are open to Maryland businesses with fewer than 50 employees that have been impacted by COVID-19.
  • Interest is 0% for the first 12 months and 2% for the remaining 36 months.
  • Deferral of any payments for the first 12 months and straight amortization beginning in the 13th month through the 36th month.
  • The business must be established prior to March 9, 2020, and in good standing.
  • Applicants must have employees on their payroll for whom they have had payroll taxes withheld (W-2 employees).

Required documentation is two years of historical financial statements and most recent interim statement to benchmark revenue against six-month pro forma of estimated lost revenue or other documented loss evidence; a minimum personal credit score of 575; and no collateral requirements. Eligible uses include working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of operations.

The business must demonstrate financial stress or disrupted operations, which may include but are not limited to notices from tenants closing operations and not paying rent caused by loss of income; notice of inability to pay rent or make loan payments due to reduced sales or suspended operations; increased cost related to COVID-19 prevention measures; notice of disrupted supply network leading to shortage of critical inventory or materials; and other circumstances subject to review on a case-by-case basis.

More information on the Maryland COVID-19 Emergency Relief $75 Million Loan Fund and how to apply is available here: https://onestop.md.gov/forms/maryland-small-business-covid-19-emergency-relief-loan-fund-5e7a6d838bdbb100fe352aa9

The COVID-19 Emergency Relief $50 Million Grant Fund offers working capital to assist Maryland small businesses and non-profits with disrupted operations due to COVID-19. Grant assistance is intended to provide interim relief complementing actions with its bank, business interruption insurance, and financial partners.

The program offers grants of up to $10,000 not to exceed 3 months of cash operating expenses for Maryland businesses and nonprofits with 50 or fewer employees that a impacted by the COVID-19 pandemic. Parmeters to qualify are:

  • The business must have been established prior to March 9, 2020, and the business must be in good standing.
  • Applicants must have employees on their payroll for whom they have had payroll taxes withheld (for example, W-2 employees).
  • Annual revenue of the business or non-profit can't exceed $5 million as evidenced by financial statements or other financial documentation.
  • Business or nonprofit is expected to seek longer term funding through its bank, SBA, or other source.

Eligible uses include working capital to support payroll expenses, rent, mortgage payments, utility expenses, or other similar expenses that occur in the ordinary course of operations.

The business or non-profit must demonstrate financial stress or disrupted operations, which may include but are not limited to notices from tenants closing operations and not paying rent caused by loss of income; notice of inability to make loan payments due to reduced sales or suspended operations; increased cost related to COVID-19 prevention measures; notice of disrupted supply network leading to shortage of critical inventory or materials; and other circumstances subject to review on a case by case basis.

More information on the Maryland COVID-19 Emergency Relief $50 Million Grant Fund is available here: https://onestop.md.gov/forms/maryland-small-business-covid-19-emergency-relief-grant-fund-5e7a6d8db5d67700fe1e6050

The Maryland Department of Commerce, which administrates the pr—ograms, can be reached at 1-888-246-6736 or 410-767-6300.

Recently passed federal legislation also outlines loan opportunities through the Small Business Administration. The Coronavirus Aid, Relief and Economic Security Act (CARES Act) includes tax-relief provisions for individuals, families and businesses.

One program expands eligibility for entities suffering economic harm due to COVID-19 to access the SBA Economic Injury Disaster Loans, while also giving SBA more flexibility to process and disperse small-dollar loans. The bill allows businesses that apply for an EIDL-expedited access to capital through an emergency grant--an advance of $10,000 within three days to maintain payroll, provide paid sick leave, and to service other debt obligations.

In addition, employers subject to closure or partially suspended operations can qualify for a refundable payroll tax credit for 50% of wages paid from March 13, 2020, through Dec. 31, 2020. To qualify, a business must have been partially or fully suspended due to a local COVID-19 shut-down order or have had gross receipts decline by more than 50% from the same quarter last year.

The credit is capped at $10,000 per employee, including health benefits. For employers with fewer than 100 employees, all employees count toward the credit, but for employers with more than 100 employees, only those not working because of the COVID-19 crisis count.

More information on federal programs is available here: www.SBA.gov. The phone number is 1-800-659-2955.

Please note that the income tax filing deadline for 2019 earnings has been extended from April 15 to July 15.

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