The sudden and unexpected COVID-19 pandemic and the various efforts to contain it have significantly disrupted global commerce while imperiling companies both big and small. We have created a COVID-19 response page to help our clients stay apprised of important developments and explore legal strategies to help mitigate the impact of the outbreak on their business and their employees, whether it is taking advantage of certain government programs, evaluating force majeure provisions in key contracts, negotiating terms with landlords, suppliers, and creditors, implement employee retention policies, or navigating other disaster planning measures.
As revenue streams have significantly decreased or become non-existent, many small businesses may be without the resources to continue to meet their financial demands. This challenge is more pronounced for small businesses that are less likely to have continuity plans, business interruption insurance or cash reserves dedicated to unforeseen events.
Federal and State government officials are working feverishly to combat the effects of the pandemic and provide financial support to the businesses and/or individuals most affected. While the response and resources available in connection with the epidemic are constantly changing, the Federal government and New York state have already developed legislation and executive orders aimed at providing relief to small businesses affected by the downturn due to the COVID-19 outbreak.
The following presents a few resources that are currently available to small businesses in New York City or other counties in New York state.
NYC Small Business Continuity Fund
NYC is set to offer interest-free loans of up to $75,000 for businesses with less than 100 employees whose sales have decreased by 25% or more due to the COVID-19 outbreak. Eligible businesses must be located within the 5 boroughs of New York City, establish that the outbreak caused a 25% reduction in revenue, employ 99 or fewer employees, demonstrate an ability to repay the loan, and have no outstanding tax liens or legal judgments. Businesses interested in this relief may complete an interest form to be notified when the application period is open at https://www1.nyc.gov/site/sbs/businesses/covid19-business-financial-assistance.page
NYC Employee Retention Grant Program
To help retain employees, NYC is also offering grants of 40% of payroll costs for two months (capped at $27,000) to small businesses with less than 5 employees whose sales have decreased by 25% or more due to the COVID-19 outbreak. Eligible businesses must be located within the 5 boroughs of New York City, establish that the outbreak caused a 25% reduction in revenue, employ a total of 1-4 employees, have been operating at least 6 months, and have no outstanding tax liens or legal judgments. Applicants must provide payroll records for each employee as well as a signed federal tax form 1120, lease agreement, or three months of operations bills to prove NYC location. More information and the link to apply can be found at https://www1.nyc.gov/nycbusiness/article/nyc-employee-retention-grant-program
For both the Small Business Continuity Fund and Employee Retention Grant Program, The reduction in revenue is calculated by comparing average revenue for the months of the COVID-19 impact with the average revenue for the same period during 2019 and the total revenue of 2019. Applicants must provide financial documents, which can include point-of-sales reports, bank statements, quarterly sales tax filings, 2019 tax returns, or CPA certified profit & loss statements.
For more information about both programs, small businesses can go to https://www1.nyc.gov/site/sbs/businesses/covid19-business-financial-assistance.page
SBA Disaster Assistance
Businesses in all New York counties are eligible for the Small Business Administration disaster loan program to overcome the temporary loss of revenue due to the outbreak. The interest rate for the loans is 3.75% and may be used to pay fixed debts, payroll, and accounts payable. The loans offer up to $2 million in assistance and the term may be a maximum of 30 years, which is determined on a case-by-case basis depending on the business’s ability to repay. Information can be found at https://disasterloan.sba.gov/ela/Declarations/DeclarationDetails?declNumber=6063499&direct=false.
The link to apply can be found at https://disasterloan.sba.gov/ela/Account/Register1
