Coronavirus news has dominated headlines, triggering anxiety for many small business owners in the U.S. Here’s how federal, state and local governments are helping businesses combat the financial impact of the COVID-19 pandemic.

Measures being deployed against the economic effects of the coronavirus outbreak include:

  1. Declaring a national emergency
  2. Containing the spread of coronavirus to consumers and workers
  3. Providing Small Business Administration (SBA) Economic Injury Disaster Loans
  4. Relieving distressed industries
  5. Lowering interest rates
  6. Promoting zero-interest loans
  7. Allowing tax deferment
  8. Encouraging payroll tax relief
  9. Seeking a coronavirus economic stimulus package
  10. Distributing cash to consumers and business owners

1. Declaring a National Emergency

Following the World Health Organization’s declaration that the COVID-19 outbreak constitutes a pandemic, President Donald Trump proclaimed a national emergency concerning the coronavirus pandemic.

When a national emergency is declared under the National Emergencies Act, the President assumes special powers to address a crisis. President Trump’s coronavirus emergency declaration grants the Secretary of the Department of Health and Human Services (HHS) the authority to waive certain insurance and privacy requirements usually required by law. This gives health-care providers more flexibility to respond rapidly to emerging needs.

The president’s declaration also invokes the Stafford Act, which governs federal assistance to state and local governments for disasters such as hurricanes.

  • Declaring a national emergency under the Stafford Act activates the Federal Emergency Management Agency (FEMA), an agency of the Department of Homeland Security (DHS) that handles federal assistance to state and local governments.
  • This places FEMA in charge of coordinating actions against the coronavirus by the HHS and its Centers for Disease Control and Prevention (CDC).
  • The declaration also allows the federal government to directly assist state and local governments and health-care providers with funding, personnel and logistical support.

For Instance

FEMA is working with state and local health-care providers to set up drive-through test sites and emergency operation centers and hospitals. The move releases up to $50 billion in federal aid for fighting the coronavirus in the U.S.

How This Helps Small Businesses

Declaring a national emergency gives the federal government more power to assist businesses with funding and health-care measures that can keep workers and customers healthy. It also cuts through red tape that could slow aid measures as well as raises the urgency for federal, state and local agencies to respond rapidly to the crisis.

The federal government’s response to the coronavirus places a high priority on containing the spread of the virus among consumers and workers.

2. Containing the Spread of Coronavirus to Consumers and Workers

The federal government’s response to the coronavirus places a high priority on containing the spread of the virus among consumers and workers. To achieve this, the Trump administration has followed the advice of health-care advisers in discouraging public gatherings in the workplace and other environments that could potentially spread the virus.

State and local leaders have followed suit, often taking measures that go beyond those recommended by federal authorities. For instance, the governors of New York, New Jersey and Connecticut have jointly issued a public health order banning gatherings of over 50 people, closing establishments such as gyms and theaters and restricting restaurants and bars to take-out deliveries.

How This Helps Small Businesses

Efforts to contain the coronavirus help businesses by making it easier to keep workers healthy. This keeps productivity up while helping businesses avoid increased absenteeism and sick-pay costs. Measures to contain the coronavirus also help keep customers healthy, keeping revenue up and protecting businesses from potential liability.

3. Authorizing SBA Economic Injury Disaster Loans

To provide financial assistance for small business owners feeling the effects of the coronavirus, the Trump administration and Congress cooperated to pass the Coronavirus Preparedness and Response Supplemental Appropriations Act (H.R. 6074). Under this legislation, the SBA is authorized to allocate $20 million to administer funding to businesses suffering economically through the Economic Injury Disaster Loan program.

The SBA’s disaster loan program makes loans up to $2 million available to companies facing a substantial economic injury that prevents them from paying their obligations and operating expenses. Low-interest loans are available for terms up to 30 years at 3.75% for small businesses without credit available elsewhere and 2.75% for nonprofits. These low-interest rates help make payment plans for small business owners affordable.

To qualify, a business must operate in a state or territory where the governor has requested disaster assistance and must not have access to available credit from other sources. Business owners can apply by going online, visiting a disaster center in person or submitting an application by mail.

How This Helps Small Businesses

This legislation opens SBA disaster loans up to businesses affected by the coronavirus pandemic, helping companies that may not qualify for other forms of financing.

4. Providing Economic Relief for Distressed Industries

The Trump administration has pledged to provide government financial assistance for small businesses in industries sharply impacted by the coronavirus economic impact. For instance, airline industry leaders have sought more than $50 billion in direct aid and loan guarantees, and President Trump has promised to back the industry “100%,” an announcement that sent airline stocks up.

Some state and local governments are also offering aid in the form of small business grants. For instance, small business grants are available in N.Y. state for New York City businesses with less than 5 employees.

How This Helps Small Businesses

These measures help industries and companies sharply hit by the economic effects of the coronavirus.

5. Lowering Interest Rates

To offset stock market declines triggered by coronavirus concerns and other factors, the Trump administration has persuaded the Federal Reserve to lower the federal funds rate that determines national interest rates to a target range of 0% to 0.25%. This effectively lowers interest rates on everything from mortgages to credit cards. This move will tend to promote more spending by consumers and more lending to businesses.

How This Helps Small Businesses

Lower interest rates make financing more readily available throughout the economy. This encourages consumers to spend more, bolstering revenue while encouraging banks and credit card providers to provide financing to businesses.

6. Promoting Zero-Interest Loans

For business owners, lower interest rates mean it will be easier to apply for lower rates on SBA loans, term loans, business lines of credit and other forms of financing. Low-interest and no-interest business loan opportunities are available through both federal and state government initiatives.

For Instance

The Florida Small Business Emergency Bridge Loan Program offers short-term, interest-free working capital loans to companies suffering from the economic effects of the coronavirus.

How This Helps Small Businesses

Promoting low-interest and zero-interest loans makes it easier for companies to obtain financing to continue operating during the coronavirus pandemic. It also reduces the strain small businesses will face when repaying loans.

A couple review the terms of a low-interest loan with their financial adviser.

7. Allowing Tax Deferment

The Treasury Department announced that the April 15 tax deadline for individuals and most businesses will be pushed back 90 days. You still have to file by April 15, but you can delay paying for another 3 months without incurring interest or penalties. Individuals can defer up to $1 million in tax liability, while corporations can file a business tax extension for up to $10 million. The Trump administration also is considering deferring quarterly business tax payments. The Internal Revenue Service has added a Web page on coronavirus tax relief to keep taxpayers advised of updates.

How This Helps Small Businesses

Deferring tax payments allows small businesses to put more funds toward covering immediate operating expenses, offsetting revenue losses and easing cash-flow burdens. It also gives companies more time to plan how to adjust their tax strategy in response to the impact of the coronavirus.

8. Encouraging Payroll Tax Relief

President Trump has urged Congress to authorize financial assistance for small businesses in the form of payroll tax relief. The U.S. Chamber of Commerce echoed this plea in a letter to U.S. government leaders, pointing out that payroll taxes increase an employer’s cost per worker by 15%. Temporarily relieving these costs would leave employers with more money to cover employee salaries and other expenses.

How This Helps Small Businesses

Reducing payroll taxes temporarily provides companies with more cash to cover working capital expenses and avoid cash crunches.

9. Seeking a Coronavirus Economic Stimulus Package

To consolidate various measures to assist businesses affected by the COVID-19 outbreak, the Trump administration has proposed an $850 billion coronavirus economic relief stimulus package. The proposal includes provisions for aid to the airline industry, emergency loans to small businesses and other measures.

How This Helps Small Businesses

A stimulus package funding emergency loans to businesses could free up significant financing to help small companies weather the coronavirus pandemic.

10. Distributing Cash to Consumers and Business Owners

Republican and White House proposals for offsetting the impact of the coronavirus include a proposal to send checks directly to individual Americans. Different versions of the proposal have suggested sending one or more $1,000 checks to individuals as soon as possible, a move that would cost about $500 billion. It remains to be seen whether this measure will pass, but the administration is pushing for quick passage before the end of March.

How This Helps Small Businesses

Receiving $1,000 or more would provide consumers with more money to spend, bolstering business revenue. For smaller business owners, an extra $1,000-plus could help cover expenses.

Keep Updated on Coronavirus News to Protect Your Company’s Finances

The coronavirus pandemic and its economic impact will remain an ongoing, rapidly developing situation for weeks and months to come. Government responses to the situation will adapt as needs change.

To protect your company’s finances, it’s crucial to keep updated on the latest developments that affect your financing opportunities and payroll and tax obligations. Follow the Fast Capital 360 blog to stay informed on the latest coronavirus news that impacts your business.

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