Emergency Preparedness & Response

Help is Available for Businesses Impacted by COVID-19

Many very well run businesses are being impacted by the unprecedented and sudden disruption to operations and loss of revenue due to the COVID-19 virus.  If your business is one of them, there is help available.

Comprehensive Information from the Thurston Economic Development Council


Information for Employers and Their Employees

The Washington State Employment Security Department provides information to employers so impacted by the loss of business due to the COVID-19 virus that they find it necessary to reduce hours or lay off staff, and for their impacted employees.  That information is available here.

COVID-19 Federal Assistance for Small Businesses

In response to the COVID-19 Pandemic, the Coronavirus Aid, Relief, and

Economic Security Act, or the “CARES” Act (HR 748) has been signed into law. This legislation provides nearly $2 trillion in assistance, including tax credits and $377 billion for loans and grants to assist small businesses with the impacts of COVID-19.

The following document outlines the primary loan programs made available to small businesses including $350 billion in loan forgiveness grants and $10 billion for Economic Injury Disaster loans and grants.

Information is also provided on bill’s tax provisions, including the payroll tax deferral. This provision is intended to provide immediate cash flow assistance to businesses by allowing employers to delay payment of their share of FICA payroll taxes (and half of SECA tax liability). However, the full amount of these taxes will be due by the end of December 31, 2022 with the initial 50% due at the end of 2021.

DISCLAIMER – While this document represents the best available information at this point in time, the Small Business Administration (SBA) and Internal Revenue Service (IRS) have not yet issued guidance on these programs.  This document was finalized the same day legislation was approved by Congress, and is intended to inform businesses of the options that will soon be available to them. Please look for official guidance from the federal agencies in the coming days, and work with your accountant, lender, and/or other advisors to confirm how these programs can best assist you.


Loans and Grants

 Paycheck Protection Program (Forgivable Loans)

The bill provides $350 billion for a new Paycheck Protection Program (PPP) to make loans to small businesses through the existing framework of the Small Business Administration’s 7(a) program, the agency’s flagship loan offering. The 7(a) program is a partnership between private financial lenders, which issue the loans, and the SBA, which guarantees them.


Eligibility: Businesses with 500 employees or fewer or that otherwise meet the current Small Business Administration (SBA) size standards; self-employed individuals & “gig economy” workers; and certain non-profits, including 501(c)(3) organizations, 501(c)(19) veteran organizations, and tribal businesses with under 500 employees. Borrowers will need to have been in business as of Feb. 15, 2020, and paid employee salaries and payroll taxes, or paid independent contractors.

The law requires eligible borrowers to make a good faith certification that the loan is necessary due to the uncertainty of current economic conditions caused by COVID-19; they will use the funds to retain workers and maintain payroll, lease, and utility payments; and are not receiving duplicative funds for the same uses from another SBA program.

Loan Details: The maximum loan amount available under the Paycheck Protection Program will be 250% of an employer’s average total monthly payroll costs, up to a maximum loan amount of $10 million ($5 million more than the normal 7(a) limitation). The loands carry a 100% federal guarantee. The bill also sets the maximum interest rate for these loans at 4% and allows borrowers to defer payments for six months to a year.

Allowable Uses: Allowable uses include payroll support (including paid sick or medical leave), employee salaries, mortgage payments, insurance premiums and any other debt obligations. Covered payroll costs include salary, wages, and payment of cash tips up to a maximum annual pay rate of $100,000; employee group healthcare benefits, including insurance premiums; retirement contributions; and covered leave.

Restrictions: By receiving a loan under this program, businesses may become ineligible for other relief provided in the bill. For example, loan recipients under this program are ineligible for the employee retention credit found in Section 2301 of the CARES Act. However, the Act does allow a business to receive both a PPP loan and an economic injury disaster loan (EIDL) under certain circumstances, including if the EIDL is made before PPP loans are available and is not being used for a purpose covered by the PPP loan, or if the borrower received the EIDL for a disaster other than COVID-19.

Loan Forgiveness: Borrowers would be eligible for loan forgiveness equal to the amount spent by the borrower on payroll costs during an 8-week period after the loan origination date (including additional wages to tipped workers), interest payment on any mortgage incurred prior to February 15, 2020, rent payment on a lease in force prior to that date, and utility payment for service which began prior to that date.

Loan forgiveness amounts cannot exceed the principal amount of the loan. Forgiveness amounts would be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25% of their prior year compensation. Loan amounts not forgiven after one year would be carried forward as an ongoing loan with a maximum term of 10 years, at a maximum of 4% interest, while the 100% loan guarantee would remain intact.

To encourage employers to rehire employees who have already been laid off due to the COVID-19 crisis, borrowers that re-hire workers previously laid off wouldn’t be penalized for having a reduced payroll at the beginning of the loan period.

Credit Profile: The main underwriting standards for eligibility will be proof of payroll costs, and is expected to be significantly relaxed compared with 7(a) loans issued during typical times. The SBA will release detailed guidelines in coming days on underwriting and application criteria.

How to Apply: The SBA guarantees the loans, so borrowers will need to apply through banks, credit unions and other lenders. Approximately 1,800 private lenders are already approved to issue 7(a) loans. SBA plans to issue new regulations that will make it possible for almost all FDIC-insured banks to make SBA loans, so businesses can reach out to their existing lenders and inquire about applying for a 7(a) small business loan.

The SBA is required to streamline the process to bring additional lenders into the program, and the Treasury Secretary would be authorized to expedite the addition of new lenders. Secretary Mnuchin has stated plans to implement a very simple process within a week under which loans can be made and disbursed in the same day.  Information will be made available at


Emergency Expansion of “Economic Injury Disaster Loans” (EIDL)

The bill provides an additional $10 billion and expands eligibility for access to the SBA’s Economic Injury Disaster Loans (EIDL), an existing program that provides economic relief to businesses impacted by disasters. Generally, EIDLs provide up to $2 million for working capital and have a 3.75% interest rate for small businesses and a 2.75% rate for nonprofits.

Eligibility: While EIDL eligibility is normally restricted to specific areas with a disaster declaration, all qualifying small businesses in the U.S. are eligible for a disaster relief loan from the SBA due to the breadth and scope of COVID-19’s impact on the American economy.  Prior to the CARES Act, EIDLs have been available to small businesses, small agricultural cooperatives, small businesses engaged in aquaculture, and most private, nonprofit organizations. The legislation also expands eligibility to include tribal businesses, cooperatives, and ESOPs with fewer than 500 employees or any individual operating as a sole proprietor or an independent contractor during the covered period (January 31, 2020 to December 31, 2020.)

Loan Details: Through the EIDL program, SBE will offer up to $2 million in assistance and provide economic support to small businesses to help overcome the temporary loss of revenue they are experiencing. Loans can be used to provide paid sick leave to employees, maintain payroll, meet increased costs to obtain materials, make rent or mortgage payments, and repay obligations that cannot be met due to revenue losses.

SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years.  Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay. These loans may 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. The interest rate for non-profits is 2.75%.

The bill also provides $10 billion for SBA to establish provide Emergency Grants to allow an eligible entity who has applied for an EIDL loan due to COVID-19 to request an advance on that loan, of not more than $10,000. The advance will be provided within three days of applying for the loan, and businesses will not be required to repay the advance, even if they are denied for an EIDL.

Restrictions: Business are allowed to receive both a Paycheck Protection loan and an EIDL under certain circumstances, including if the EIDL is made before PPP loans are available and is not being used for a purpose covered by the PPP loan, or if the borrower received the EIDL for a disaster other than COVID-19.

Credit Profile: During the covered period, SBA is allowed to approve and offer EIDL loans based solely on an applicant’s credit score, or use an alternative appropriate alternative method for determining applicant’s ability to repay. The legislation requires that for any SBA EIDL loans made in response to COVID-19 before December 31, 2020, the SBA shall waive normal restrictions including any personal guarantee on advances and loans below $200,000, the requirement that an applicant needs to have been in business for the 1-year period before the disaster, and the credit elsewhere requirement.

How to Apply: Applicants can access applications directly from SBA’s website at


Tax Credits

 Employee Retention Tax Credit

The CARES Act includes a provision providing a refundable payroll tax credit to eligible employers for 50 percent of wages paid to employees during the COVID-19 crisis. The provision provides a refundable credit against payroll tax (Social Security and Railroad Retirement) liability equal to 50% of the first $10,000 in wages per employee (including value of health plan benefits).

Eligibility: Employers must meet one of the following criteria:

  • Business operations were fully or partially suspended operations due to orders from a governmental entity limiting commerce, travel, or group meetings; or
  • Experienced a year-over-year (comparing calendar quarters) reduction in gross receipts of at least 50% – until gross receipts exceed 80% year-over-year.

For employers with more than 100 full-time employees, only employees who are currently not providing services for the employer due to COVID-19 causes are eligible for the credit. The employee retention credit is effective for wages paid after March 12, 2020, and before January 1, 2021.

Payroll Tax Payment Deferral

Under the bill, employers and self-employed individuals may delay payment of the employer’s share of FICA payroll taxes (and half of SECA tax liability), with 50% of such taxes due by December 31, 2021, and the other 50% due by December 31, 2022. This tax provision is intended to immediately increase the amount of cash available to businesses nationwide, but does represent only a delay in the due date of these taxes.

Previously Approved Federal Tax Credits

The Families First Coronavirus Response Act (FFCRA) was signed into law on March 18th, 2020, and required companies that employ less than 500 employees to pay 80 hours of sick leave and up to 12 weeks of family leave for employees who are required to stay home because of six specific Coronavirus Disease 2019 (COVID-19)-related reasons. To assist employers, the legislation included the following provisions:

Credit for Paid Sick Leave – Each quarter, private employers are entitled to fully refundable tax credits for both paid sick leave and paid FMLA. The tax credits are applied against an employer’s already-owed Social Security taxes. However, if that offset is not enough to cover these payouts to employees, then the Treasury Department is authorized to help cover the rest with cash payouts.

In addition, the Treasury is directed to issue regulations to waive penalties for usinesses not submitting their payroll taxes if they do so in anticipation of a refund under the new law. In addition, the Treasury Department has said they will soon be releasing a form for small businesses to request an expedited advance on their refund.

Additionally, an employer’s tax credit is increased by the amount the employer pays to maintain health care related to new sick leave and FMLA benefits. This will allow a company to maintain health care benefits while the employee is on leave.