COVID-19 Financing Options
Municipal, state and federal agencies are providing financing assistance to small businesses impacted by the COVID-19 pandemic. This page provides important information and connections with special government financing programs during the current emergency, as well as the regular financing options available through LVEDC and the Lehigh Valley Lending Network.
Paycheck Protection Program
The Small Business Administration (SBA) reinstated the Paycheck Protection Program (PPP) as of Jan. 11, with an allocation of $284 billion. PPP loans are designed to provide a direct incentive for small businesses to keep workers on the payroll.
To promote access for smaller lenders and their customers, the SBA initially will accept only PPP loan applications from participating Community Financial Institutions (CFIs). CFIs may begin submitting applications from businesses that do not have an existing PPP loan on Jan. 11 and from businesses for second PPP loans on Jan. 13. Lending will reopen for eligible lenders with $1 billion or less in assets on Jan. 15, and for all participating lenders on Jan. 19. All eligible businesses and organizations may apply for PPP loans through March 31.
Loan eligibility has been expanded from the first PPP loan cycle. Some funding has been designated specifically for underserved businesses, such as woman-owned and minority-owned businesses.
The SBA has published Round 2 guidelines along with guidelines for businesses that are applying for a second PPP loan. The Small Business Development Center offers a training webinar on the process of applying for financial assistance programs include PPP loans. Webinars are being held Thursdays at 9 a.m. from Jan. 21 through Feb. 25. Click here to select a webinar date and register to attend.
To apply for a PPP loan, contact your SBA banker. Small businesses that need access to SBA-approved CDFIs and small lenders can use SBA’s Lender Match tool to find lenders.
Highlights of the reinstated PPP include:
- Eligibility has been expanded to 501(c)(6) business organizations, housing corporations, destination marketing organizations, and other types of non-profit organizations. Publicly held companies are excluded. Refer to PPP guidelines for additional exclusions.
- Second-time borrowers must have used, or will use, the full amount of their first PPP loan for authorized purposes on or before the expected date of the second loan’s disbursement.
- PPP borrowers that did not receive loan forgiveness by Dec. 27, 2020, may (1) reapply for a first-draw PPP loan if they previously returned some or all of the first-draw loan funds, or (2) request to modify their first-draw loan under certain circumstances if they did not accept the full amount for which they were eligible.
- Generally, first-time loan recipients must have fewer than 500 employees per location and second-time loan recipients must have fewer than 300 employees per location. Refer to PPP guidelines for specific requirements because the SBA has alternative size standards that may apply.
- First-time PPP loan applicants are subject to the original PPP eligibility rules, which means they do not have to show revenue losses as a result of the pandemic; second-time applicants must demonstrate a reduction in gross receipts of at least 25% between comparable quarters in 2019 and 2020.
- First time loan recipients are eligible for a maximum loan of $10 million; second time loan recipients are eligible for a maximum loan of $2 million.
- Loan amounts will be based on average monthly payroll costs: Borrowers may qualify for a PPP loan of up to 2.5 times their average payroll and payroll costs for the period chosen, but businesses in the Accommodation and Food Services sectors (NAICS Code 72) may qualify for a PPP loan of up to 3.5 times their average payroll and payroll costs.
- The eligible expenditures that PPP loans may be used to cover have been expanded to include operational expenses, property damage costs, supplier costs, and employee protection, including personal protective equipment. Note: Borrowers receive full loan forgiveness if they spend at least 60% of their PPP loan on payroll costs over a time period of their choosing, between 8 and 24 weeks.
- Whether businesses are taking out a second PPP loan or modifying an existing loan, terms will be the same as their original PPP loan; for all new loans, any amount not forgiven becomes a loan at 1% interest repayable over five years.
- The SBA will forgive loans if all employee retention criteria have been met and the funds are used for eligible expenses. As of Jan. 12, the SBA had forgiven more than 1.1 million PPP loans totaling more than $100 billion.
- PPP forgiveness expenses are tax-deductible.
- If you received an EIDL grant (see Other SBA Programs section below), you don’t have to deduct the grant amount from your PPP loan forgiveness amount.
- No collateral or personal guarantee required.
- US Treasury Department Paycheck Protection Program (PPP)
- US Small Business Administration (SBA) PPP Information
- Programa de Protección de Pago (PPP) en Español
- SBA Lender Match (find approved lenders)
- PPP Lender Information
- Small Business Development Center Training Webinar Registration
- PPP Loans First-Draw Overview
- PPP Loans Second-Draw Overview
- US SBA: Frequently Asked Questions about PPP Loan Forgiveness
- PPP Flexibility Act Summary (Modifies provisions related to forgiveness of PPP loans)
Other SBA Programs
The SBA is accepting applications from eligible businesses for Economic Injury Disaster Loans (EIDL). These loans provide up to $2 million in financial assistance for small businesses experiencing a temporary loss of revenue. The interest rate is 3.75% for small businesses and 2.75% for nonprofits for terms up to 30 years. An additional $20 billion has been allocated to the EIDL program. Some businesses not eligible to receive PPP loans may qualify under the EIDL program. The SBA has extended the deadline to apply for EIDL loans related to the COVID-19 disaster declaration to Dec. 31, 2021.
The SBA, through the EIDL program, also offers grants (EIDL Advance) to qualifying businesses. Additional funding has been allocated to the SBA to resume the EIDL Advance program, which offers businesses $1,000 per employee up to a maximum of $10,000. Under the new program guidelines, businesses will not have to deduct the amount of the EIDL Advance grant from their PPP loan forgiveness amount. The SBA soon will release grant program guidelines and information. We will update the website when that information becomes available.
The SBA Express Bridge Loan Pilot Program provides small businesses that have existing relationships with SBA Express lenders access to as much as $25,000, which may be used as a term loan or bridge loan while applying for an EIDL loan. The SBA is updating its website to reflect program changes.
The SBA previously had provided 6 months of Debt Relief for holders of 7(a), 504 and Microloans. Under provisions of the new CARES Act legislation approved in December 2020, Debt Relief will be extended. The SBA will announce details of the changes in the near future. We will update this website when the information becomes available.
The Lehigh University Small Business Development Center (SBDC) can assist with the application process and provide additional information about SBA assistance programs.
- US SBA Coronavirus (COVID-19): Small Business Guidance & Loan Resources
- US SBA Economic Injury Disaster Loans
- US SBA Express Bridge Loan Pilot Program
- US SBA Debt Relief
- US SBA Coronavirus Recovery Information in Languages Other than English
- Lehigh University Small Business Development Center (SBDC)
Shuttered Venue Operator Grant Program
This new SBA program will provide grants of up to $10 million to operators or promoters of live performance venues, theater operators, live performing arts organizations, museums, movie theaters, or talent representatives that were in business as of Feb. 29, 2020, and can demonstrate a 25% reduction in revenues. The SBA is still setting up this program and is not yet accepting grant applications. For more information, email [email protected].
Grants may be awarded to an eligible person or entity, as well as supplemental grants equal to 50% of the initial grant, to cover specified expenses including payroll costs, rent, utilities, and personal protective equipment. SVOG grants will be administered by the SBA’s Office of Disaster Assistance.
Venues are not eligible for SVOG grants if they receive a PPP loan on or after Dec. 27, 2020. Venues are eligible for SVOG grants if they received a PPP loan before Dec. 27, 2020, or if they received or plan to apply for an Economic Injury Disaster Loan (EIDL).
Grant amounts will be based on 45% of 2019 gross earned revenue for venues that were operating on or before Jan. 1, 2019. For newer venues, grants will be based on average monthly gross revenue for each full month of operation in 2019 multiplied by six. Partial months will not be included in the calculation.
The total authorization is $15 billion, of which $2 billion has been set aside for eligible entities with 50 or fewer full-time employees. In the first 14 days after the program is launched, grants will be limited to entities that have lost 90% or greater of revenues. In the 14 days after that, grants will be limited to entities that have lost 70% or greater of revenues. Following that period, all other eligible entities may apply.
Employee Retention Tax Credit
The new federal assistance package amends and extends the Employee Retention Tax Credit of the CARES Act, which was established to encourage employers to keep workers on their payroll. The credit now covers qualified wages through June 30, 2021, and has been increased from 50% to 70% of qualified wages. The per-employee wage cap has been increased; up to $14,000 in credits is available to employers for qualified wages paid in 2021. Also, employers that have received PPP loans are now eligible to claim the Employee Retention Tax Credit, although payroll costs used to determine the amount of PPP loan forgiveness may not include costs for which the Employee Retention Tax Credit was claimed.
The Internal Revenue Service is updating its website to reflect these changes in the Employee Retention Tax Credit. We will add links to information about the tax credit revisions when they become available.
Deferral of Social Security Tax Payments Extended
Deferral of the employers’ share of Social Security tax payments has been extended through the March 2021 period. The deferred payments can be repaid as late as 2022. This extension does not relieve employers of their obligation to pay Social Security taxes. We will add links to information about this extension when they become available.
Restaurant Relief Fund
The Greater Lehigh Valley Chamber of Commerce will provide additional support to restaurants to help offset COVID-related expenses during the restrictions on indoor dining. Lehigh Valley restaurants operating on a main street or surrounding traditional neighborhood are encouraged to apply. A total of $150,000 will be made available to 100 restaurant owners, for use with rent, payroll, or other operating expenses. A committee will review and approve applications based on availability of funds, with priority given to restaurants that have not received COVID-19 relief funding previously. Visit here for more information.
Lehigh County CARES Act Tourism Grant Program
Lehigh County is using federal CARES Act funding to provide grants for tourism-related businesses in Lehigh Valley. The grant program is administered by Lehigh County in partnership with Discover Lehigh Valley. For-profit and non-profit tourism businesses of any size that have been negatively affected by the COVID-19 pandemic may apply.
Federal Reserve Main Street Lending Program
The Federal Reserve’s Main Street Lending Program is designed to help credit flow to small businesses that were in sound financial condition before the pandemic but now face cash flow interruptions. The program offers 5-year loans of $250,000 to $3,000,000 with floating rates and principal payments deferred for two years and interest payments deferred for one year.
The Federal Reserve Bank of Boston is registering interested lenders through the program portal. Businesses will apply for loans from participating lenders, who will determine eligibility and loan approval.
The Federal Reserve intends to purchase 95% of Main Street Lending Program loans to share the risk that otherwise would be absorbed solely by lenders, creating additional capacity for lenders to extend more loans.
Links to COVID-19 Programs Now Closed
- Pennsylvania DCED COVID-19 Relief Statewide Small Business Assistance
- Pennsylvania DCED COVID-19 Hazard Pay Grant
- Recipients of Pennsylvania COVID-19 Hazard Pay Grants
- Northampton County COVID-19 Relief Block Grant Program
- Northampton County/SBDC COVID-19 Technical Assistance Grant
- Northampton County COVID-19 Small Business Emergency Relief Fund Loan Application
- Lehigh County COVID-19 Relief Block Grant Program
- Lehigh County CARES Act Tourism Grant Program
Access to the lowest-cost loans available
The Lehigh Valley Lending Network (LVLN) is an award-winning, nationally recognized unique partnership of local financial institutions with a goal to create efficiencies in accessing credit and other resources within the private commercial lending community. The Lending Network also provides the client with resources to maximize the use of incentives available through the economic development community and to connect borrowers to a lending network that provides business financing & commercial loans at fixed-rates in Lehigh Valley for machinery, equipment and more.
The LVLN provides a single point of access to allow business financing proposals to be broadcast to many commercial lending institutions simultaneously. Additionally, the financing programs that Lehigh Valley Economic Development Corporation (LVEDC) administers on behalf of the Lehigh Valley’s regional economic development organizations may be marshaled to assist in a given project.
The membership of the LVLN is comprised of private commercial lending institutions serving the Lehigh Valley.