As the COVID-19 pandemic halts construction projects and postpones home repairs, many contractors' finances are taking a hit.
Fortunately, Congress recently passed the CARES Act stimulus bill to offer economic relief to individuals and small businesses affected by the pandemic. In addition, the Small Business Administration has several loan programs that can help roofing contractors. There are also tax credits your company may qualify for.
We've broken down the small business relief programs currently available to help your business get the support it needs.
Paycheck Protection Program
Self-employed workers, sole proprietors, independent contractors, non-profits, and small businesses that have fewer than 500 employees can apply for a federally-guaranteed loan of up to $10 million through the Small Business Administration's (SBA) Paycheck Protection Program.
The government is providing this small business aid to incentivize companies to keep their employees on the payroll. The SBA will forgive the loan if you keep your employees on payroll for eight weeks and use the loan to pay for rent, mortgage interest, utilities, and/or payroll expenses. The starting interest rate on these loans is .5%, and the maximum interest rate is only 4% for loans that aren't forgiven. Small business owners don't have to start making loan payments for six months.
How to apply for funding: Participating SBA lenders will distribute these loans. Use the SBA's lookup tool to find a lender. You can download the loan application from the Treasury Department's website.
Employee Retention Credit
The Employee Retention Credit is another form of small business aid that can help you pay employees.
This refundable tax credit is for businesses that pay sick or family leave to employees who are unable to work because of illness or the need to care for a sick family member. The credit equals 50% of the qualified wages and health plan expenses paid for each employee between March 12, 2020 and Jan 1, 2021. Eligible employers whose business has been affected by the COVID-19 pandemic can get a credit of up to $5,000 for each employee.
How to apply for funding: Report the qualified wages and credit on your federal employment tax return—typically Form 941, the Employer's Quarterly Federal Tax Return—when you file next year.
Economic Injury Disaster Loans
Because of the CARES Act, small business owners also can apply for Economic Injury Disaster Loans & Emergency Economic Injury Grants.
The Disaster Loan program provides up to $2 million in low-interest loans to small businesses and non-profits that have lost revenue due to COVID-19. Through the grant, you can get an advance of up to $10,000 within three days when you apply for a disaster loan. You will not have to repay the advance.
How to apply for funding: Loans are available until Dec 31. Apply on the SBA's website.
SBA Loan Debt Relief Program
If you already have a non-disaster SBA loan, you can apply for debt relief. Under this program, the SBA pays the principal and interest on current 7(a) loans and new 7(a) loans issued before Sept 27. 7(a) loans allow people who lack credit to borrow up to $5 million to purchase an existing business, refinance debt, or buy furniture and supplies for their business.
How to apply for funding: Contact your current SBA lender for more details or your local Small Business Development Center for help with the application process for new loans.
SBA Express Bridge Loan
If you already do business with an SBA Express lender, you can apply for a bridge loan of up to $25,000. The loan is designed for small businesses who are applying for an Economic Injury Disaster Loan, but need cash immediately. Once you're approved for the disaster loan, you can use some of it to partially or fully repay the bridge loan.
How to apply for funding: Contact your local SBA district office to find a lender.
Further Economic Support for Small Businesses
Small business aid provided by the government may change as new programs become available. For example, the Federal Reserve has announced a Main Street Business Lending Program and additional actions to support businesses and households.
There are also many relief programs being enacted at the state and local level. Forbes has collected a list of relief programs being administered by state and local governments. You can reach out to your local Small Business Development Office for more information on programs available to small businesses in your area.
For more information on current federal small business relief programs, you can read the Treasury Department's Small Business Owner's Guide to the CARES Act to find out which programs may meet your business's needs and how to apply for funding.
