March 17, 2020 | By Patrick T. McCloskey
On March 8th, Mayor de Blasio announced an Employee Retention Grant Program and a Business Continuity Fund designed to assist small businesses that have suffered a 25% or more decrease in revenue as a result of the COVID-19 outbreak.
The Employee Retention Grant Program will provide grants to qualifying small businesses to cover 40% their payroll costs for up to two months. To qualify for the Employee Retention Grant Program, a business must:
Under the Small Business Continuity Fund, NYC will provide zero interest loans of up to $75,000 to qualifying small businesses to help mitigate losses in profit. To qualify for the Small Business Continuity Fund, a business must :
As part of the application for these programs, a business would need to demonstrate the required revenue decrease by providing documentation such as the following: point-of-sales reports, bank statements, quarterly sales tax filings, 2019 tax returns or CPA-certified profit and loss statements.
While official applications have not yet been made available, the NYC Department of Small Business Services website has a fact sheet that includes an expression of interest link that small businesses can complete and submit for further information and consideration.
It is not clear how the decrease in revenues will be measured or how “the ability to repay the loan” will be determined. Presumably this information will be clarified once the official applications are made available. Crains Business New York reported on Friday that the official applications for these programs are expected to be made available this week.
At this stage, small businesses owners interested in availing themselves of the programs should complete and submit the expression of interest survey and start to gather the documentation referenced above to submit with their application.
While it is not clear what the specific terms of the loans under the Small Business Continuity Program will be (i.e. maturity, secured/unsecured, restrictive covenants etc.), small business owners should check any restrictive covenants contained in their existing bank loan and credit agreements (if any) to avoid inadvertently triggering a default.
This blog post is for general informational purposes only and does not constitute legal advice. No one should rely on the information in this blog post without seeking appropriate legal, accounting, tax or other appropriate advice from an attorney, accountant or other professional properly licensed in the applicable jurisdiction(s).