On Sunday, March 15, 2020, Illinois Governor JB Pritzker issued an executive order closing all restaurants and bars in Illinois, effective Monday evening. Similar measures are expected throughout the United States as all levels of government determine appropriate responses to the coronavirus (COVID-19) outbreak. Businesses will be directly and negatively affected by such measures, causing serious financial difficulties for the businesses themselves and their employees. Several potential avenues for relief are available to businesses to help ease the burden caused by governmental restrictions and the simultaneous market downturn.
Small Business Administration Loans
The U.S. Small Business Administration (“SBA”) announced on March 12, 2020 that it is offering designated states and territories low-interest Economic Injury Disaster Loans for working capital to small businesses suffering substantial economic injury as a result of COVID-19.
These loans are available to small businesses without credit available elsewhere and will be in an amount not to exceed $2 Million. The loans can be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses and 2.75% for non-profits. The term of the loan will be determined on a case-by-case basis, based upon each borrower’s ability to repay. The SBA also offers loans with long-term repayment plans to keep payments affordable, up to a maximum of 30 years.
To be eligible for these loans, a state or territory must submit the SBA a request for assistance. Upon the SBA’s approval of the state’s request, information for the application process for an Illinois small business to receive an Economic Injury Disaster Loan will be made available by the SBA to all affected communities as well as updated on its website: https://www.sba.gov/funding-programs/disaster-assistance. The SBA disaster assistance customer service center can be contacted at 1-800-659-2955 (TTY: 1-800-877-8339) or email firstname.lastname@example.org.
Unemployment Benefits, Charges, and Reporting
The Illinois Department of Employment Security (IDES) recently adopted emergency rules to make unemployment benefits available to employees and their families impacted by COVID-19. Under the new emergency rules, workers who are temporarily laid off because their employer’s business closed due to COVID-19, would qualify for unemployment benefits without having to register with the state employment service and without having to show that they are actively seeking work. The individual need only show that they were prepared to return to his or her job as soon as the employer reopened its business. Additionally, workers who (a) are diagnosed as having COVID-19, (b) must stay at home to care for a spouse, parent or child, who has been diagnosed with COVID-19, or (c) cannot work due to a government-imposed or government-recommended quarantine will be eligible for unemployment benefits through the Illinois Department of Employment Security so long as the individual registers with the state employment service and is able and available for work and actively seeking work from the confines of his or her home.
Additional valuable information regarding imminent federal action regarding employees and businesses, including the Emergency Family & Medical Leave Act, Emergency Paid Sick Leave Act, and Tax Credits for Emergency Paid Sick Leave and Paid FMLA can be found here.