With the majority of states and millions of businesses shutting down with stay-at-home orders, the country is in a downward spiral economically. In an attempt to help companies, workers and families, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act with bipartisan support. The CARES Act was signed into law by President Donald Trump on March 27, 2020. This economic relief package provides more than $2 trillion to support and protect Americans from the public health and economic impacts of COVID-19. The CARES Act also provides fast and direct economic assistance for American workers, families and small businesses, and preserve jobs for American industries, including subscription and membership companies.
- The Small Business Owner’s Guide to the CARES Act: There is a lot of information available on the CARES Act and many details to sift through. Subscription companies don’t have to sort through the information alone, however. The U.S. Senate Committee on Small Business and Entrepreneurship has put together a downloadable, 11-page guide with helpful links and FAQs, including links to local Small Business Administration (SBA) offices and small business development centers who can help guide business owners in their decision making.
- Paycheck Protection Program (PPP): Officially rolled out on April 3, 2020, this federal program provides a financial incentive to small businesses meeting SBA size standards to keep their workers employed or quickly rehiring them at the same rate of pay for eight weeks. Companies may be eligible to apply if they have been negatively impacted by COVID-19 between February 15, 2020 and June 30, 2020. At least 75% of the loan proceeds must be used for payroll. Loans will be forgiven by lenders if the proceeds are used to cover payroll costs, interest on mortgages, rent or utilities. If an employer receives a loan and reduces the number of employees or their rate of pay, they will be required to repay at least a portion of the loan. Repayment of loans can be made over 24 months and at a 1% interest rate. No collateral or personal guarantees will be required. Applications are being accepted through June 30, 2020. Visit the SBA’s PPP page online to review additional requirements and to download an application form. Additional information about the PPP is available on the U.S. Treasury website.
- Economic Injury Disaster Loan (EIDL) Emergency Advance: Small businesses experiencing a loss of revenue can apply for a loan advance of up to $10,000. The advance does not have to be repaid. Companies eligible for the advance are those with fewer than 500 employees including independent contractors, sole proprietors and the self-employed. Businesses in certain industries who have more than 500 employees may also be eligible. Once approved, funds will be available within one business day. Get more information and apply online at SBA.gov. Additional information about the EIDL emergency advance is available on the U.S. Treasury website.
- SBA Express Bridge Loan: Employers who already have a business relationship with an SBA Express lender may be eligible for a bridge loan of up to $25,000. This can help support a business who has lost revenue due to novel coronavirus and while they are waiting for a response to their EIDL application. Loan recipients can use the EIDL emergency advance to repay the bridge loan. One benefit to this type of loan is that it has a quick turnaround time. Learn more about the SBA Express bridge loan at SBA.gov.
- SBA Debt Relief: The SBA will automatically pay the principal, interest, and fees of current 7(a), 504, and microloans for a period of six months, and will also automatically pay the principal, interest, and fees of new 7(a), 504, and microloans issued prior to September 27, 2020. Visit SBA.gov’s Debt Relief page for additional information on debt relief options.
- Employee Retention Credit: The U.S. Treasury and Internal Revenue Service are offering businesses, regardless of size, an employee retention credit. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19. State and local governments and small businesses who take small business loans are not eligible for the tax credit. Qualifying employers must fit into one of two categories: (a) The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter, or (b) the employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts go above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter. Visit Treasury.gov for additional information on the tax credit.
- Payroll Tax Deferral: To enhance cash flow so businesses can better maintain operations and payroll, employers and self-employed individuals can defer payment of the employer share of the Social Security tax they otherwise are responsible for paying to the federal government for their employees. The deferred employment tax can be paid over the next two years—with half of the required amount to be paid by December 31, 2021 and the other half due by December 31, 2022.
- Additional state and local resources: Many individual states are offering economic assistance to businesses and families as well. Forbes is tracking these and updating their story as more information is available. As of April 10, the following states have some type of economic assistance program in place: California, Colorado, Connecticut, Florida, Illinois, Kentucky, Louisiana, Minnesota, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Oklahoma, Pennsylvania, Utah and Washington.
- Facebook Small Business Grants Program: The social media network is offering $100 million in cash grants and tax credits. Facebook will support as many as 30,000 small businesses in more than 30 countries through its grant program. To be eligible, companies must be for-profit businesses, employ between 2 and 50 people, have been in business for more than one year, have had challenges as a result of novel coronavirus, and be in or near a location where Facebook does business. Visit Facebook’s Small Business Grants page and the grant terms and conditions page for additional information. This grant program is in addition to the $100 million that Facebook is using to support the news industry during the COVID-19 crisis.
- Consider crowdfunding: The U.S. Chamber of Commerce says that many communities and small businesses are turning to crowdfunding to bridge the funding gap to get through this very challenging time. Kickstarter and GoFundMe are just two options for crowdfunding platforms that a business can try. Learn more on the U.S. Chamber of Commerce website.
Our own advice – don’t give up. In addition to the resources above, we have seen other opportunities for businesses to survive the coronavirus pandemic. Samovar in San Francisco, for example, thought all was lost when they had to lay off their employees. After a day of brainstorming and discussing options, co-founder Jesse Jacobs and his brother Josh found a way to help their community while also saving their business – using the subscription model!
The brothers created a unique meal plan subscription that would allow Bay area residents to sign up for meal and grocery pick-up delivery. This helped the Jacobs brothers keep their business open until life returns to normal. This also allowed Samovar to support local farmers and other vendors who provide the high-quality products their customers have come to expect from the 18-year-old business.
“I opened Samovar almost 20 years ago to bring people together over healthy food and tea. Our cafes have been places of intimacy, connection and eating well. Now that people can’t come to us, we’re bringing Samovar to them—in the comfort and safety of their own homes. Our team has risen to the occasion, keeping up with the latest CDC guidelines, retooling operations for online ordering, touchless curbside pickup and contactless delivery. We’re ready to bring our classic menu to guests throughout San Francisco,” said Jesse Jacobs, Samovar founder.
April 15 Webinar: 5 Ways Subscription Businesses Can Thrive in Uncertain Times
For more resources to help your subscription company outlast the COVID-19 crisis, register for our free webinar, Wednesday, April 15 at 2 p.m. Eastern, “5 Ways Subscription Businesses Can Thrive in Uncertain Times.” Subscription Insider publisher and subscription expert Kathy Greenler Sexton will host Robert Skrob, president of Membership Services, Inc., to share insights and ideas into the strategic actions you can take right now to keep your recurring revenue growing in uncertain times.