Primary Dealer Credit Facility And Money Market Mutual Fund Liquidity Facility
On March 17, 2020, the Fed relaunched a Great Recession-era program: the Primary Dealer Credit Facility , which has given loans to primary dealers backed by a wide variety of securities as collateral. There was no set limit to the amount of credit issued.
To add more liquidity to money markets, the Fed opened the Money Market Mutual Fund Liquidity Facility on March 23, 2020. This program lent money to financial institutions so that they could buy money market mutual funds. Like the PDCF, it did not have a specific lending limit.
The Treasury Department gave the MMLF $10 billion of debt credit protection for the program. On May 5, 2020, the central bank said that participation in the MMLF wouldnât affect the liquidity coverage ratio of participating banks.
This program was similar to the Asset-Backed Commercial Paper Money Market Fund program launched in 2008 after the collapse of Lehman Brothers caused a major money market fund to fail. The AMLF ended on Feb. 1, 2010.
Both the PDCF and the MMLF expired on March 31, 2021.
Paycheck Protection Program Liquidity Facility
To help small businesses, the Fed launched the Paycheck Protection Program Liquidity Facility on April 9, 2020, in concert with the CARES Act. This program lent money to banks so they could, in turn, lend money to small businesses through the Paycheck Protection Program . On April 30, 2020, the program expanded the types of lenders that could participate in the program. The program ended on July 30, 2021.
There’s Still ‘billions Of Dollars In Relief’ Available For Small Businesses: Sba Administrator
Small businesses in America can still capitalize on the pandemic stimulus program offered by the federal government, U.S. Small Business Administration Administrator Isabella Casillas Guzman told Yahoo Finance in a new interview.
We still have billions of dollars in relief in our COVID idle program, said Guzman, who began her term under President Joe Biden in March after serving as the Director of the California Office of the Small Business Advocate.
The SBA initiatives including the $953-billion Paycheck Protection Program , the Restaurant Revitalization Fund, the Shuttered Venue Operators Grant , and Economic Injury Disaster loans were created to provide crucial funding after the nationwide shutdowns stemming from the coronavirus pandemic, which led to approximately 200,000 businesses permanently shuttering in 2020.
That residual funding may be crucial as the Delta variant surge in various parts of the country dashes hopes that workers will be back in large numbers, causing small businesses owners to scramble once again.
We stand ready to support our small businesses with whatever programs we have,” she said, adding that the programs are also opportunities for businesses to position themselves to take advantage of growth opportunities during the economic recovery.
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Small Business Stimulus Grants
CARES Act small business funding is in the form of loans rather than grants. Some of these loans are forgivable, which means that you dont need to repay the loan if you meet specific requirements. In addition to traditional Small Business Administration funding options, the CARES Act also established the Paycheck Protection Program, Economic Injury Disaster Loans , SBA Express Bridge Loans and SBA Debt Relief.
According to the House Committee on Small Business, the CARES Act did include grants, but those grants went to support the SBAs resource partners, including Small Business Development Centers, Womens Business Centers and Minority Business Development Centers. These centers provide counseling and assistance to those who want to apply for stimulus grant and loan funds. If youre not sure where to get started, these local centers can guide you through the process of deciding which programs are the best fit for your business.
What Was The Need Of The Cares Act
Disproportionate effects of COVID19 persisted into May and June, as evidenced by patterns according to race, ethnicity, and immigration status. African Americans continued to suffer the highest rates of business owner turnover, with 26% of their population losing their livelihoods in May and 19% in June, CARES Act.
Also suffering heavy losses were Latinx business owners, with 19% inactive in May and 10% in June. There was a significant drop in business activity among immigrant entrepreneurs of 25% in May and 18% in June.
With the exception of agriculture, most major industries saw significant drops in the number of active business owners in April. The number of people actively running businesses in the building and plumbing trades, the food and lodging industries, the transportation industry, and the personal and laundry service trades all dropped significantly as a result of the spread of COVID19.
To sum up, the first estimates of COVID19’s effects on small businesses from the April 2020 CPS show that losses were widespread across demographic groups and types of businesses no sector was safe from the ill effects of socially distant policy mandates and demand shifts, CARES Act.
And yet, they also show signs of improvement across the board. Each month of inactivity has an effect on revenues, profits, and employees, even if it is impossible to know for sure whether or not the businesses will reopen, CARES Act.
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Sba Express Bridge Loans
Businesses that already have a relationship with an SBA lender may be eligible for Express Bridge Loans. These loans are for up to $25,000 with a fast turnaround time, and can be repaid with proceeds from Economic Injury Disaster Loans. They help businesses while they wait for other funding to come through. If you already have a relationship with an SBA lender, contact the lender to find out their process to apply for Express Bridge loans.
What Loan Program Should I Use
Although the PPP has been the most popular loan program for small businesses, it may not be the right solution for every business. Be sure to check out other loan options from the Small Business Administration , other federal loan programs, and organizations and companies providing grant money.
Here are some new federal programs aimed at helping businesses impacted by coronavirus:
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What Is The Cares Act
To mitigate the global coronavirus pandemic-induced economic downturn, U.S. lawmakers passed a $2 trillion stimulus bill in March 2020 called the CARES act. Most economists at the time predicted that the U.S. economy was already in, or about to enter, a recession, so policymakers passed landmark legislation to aid corporations large and small, industries, individuals, families, gig workers, independent contractors, and hospitals.
More than $2 trillion was spent on this rescue effort, making it the largest in American history. Comparison of the 2009 Recovery Act , the Consolidated Appropriations Act , and the American Rescue Plan Act reveals some striking differences.
Some of the loans and small business aid were still granted at the Treasury’s or SBA’s discretion, but they came with stringent conditions and were overseen by an inspector general and an oversight board appointed by Congress. The law set aside $130 billion for healthcare and another $130 billion for state and local governments to use in their fight against the pandemic, CARES Act.
‘we Want To Continue To Try To Support These Venues’
Restaurants, in particular, continue to face both labor and supply shortages.
Guzman noted that the federal Restaurant Revitalization Fund provided $28.6 billion in funding to over 100,000 businesses before ending in July, and the demand was 2.5 times that amount.
I know that Congress continues to consider whether or not they will replenish those funds,” she noted.
The SVOG, the entertainment venue program signed into law in December 2020 as part of a $900 billion COVID relief legislation package, pledged $15 billion to independent venues, promoters, theaters, and other organizations.
And though the program initially saw major delays and a stutter-start, the SBA was able to turn it around.
We’ve gotten out $9 billion and we’re continuing to wind down all those applications that are under review,” Guzman said. Please bear with us. We want to see that those funds are continuing to be disbursed every day.”
Guzman added the SBA will open a SVOG portal this week for previous awardees to apply for the supplemental program.
We want to continue to try to support these venues,” she explained. “If there was some sort of mistake in the process, obviously, that will come through during this appeals process.
The supplemental grants will be offered at just 50% of the original award amount, according to SBA, capped at $10 million. That cap includes both the initial and supplemental grant awards.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.
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Discontinued Federal Reserve Programs
Besides direct asset purchases, the Fed set up several new lending programs, both as part of the Coronavirus Aid, Relief, and Economic Security Act using funds from the U.S. Treasury Departmentâs Exchange Stabilization Fund as seed capital, and entirely on its own.
Several were set up as SPVsâseparate legal entities that allow the Fed to lend in ways that it normally doesnât. All of these programs, detailed below, have been discontinued.
How To Apply For Stimulus Money For Small Business
Related
The coronavirus has brought unprecedented challenges to small businesses. The CARES Act was signed into law on March 27, 2020, offering $376 billion in relief for workers and small businesses. Learn more about how to apply for stimulus grant and loan funds to support your business.
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Global Epidemic Alert Benefits For The Unemployed
Workers whose benefits had run out were able to receive 13 additional weeks of benefits under the CARES Act’s Pandemic Emergency Unemployment Compensation programme. The Pandemic Unemployment Assistance programme also included people who worked for themselves or as independent contractors.
The stimulus plan provided full funding for state short-term compensation benefits for workers who remained employed but with reduced hours, and incentives for states that did not have such benefits to implement them, CARES Act.
Due to the Continued Assistance for Unemployed Workers Act of 2020, the PEUC program’s benefits, which were set to expire on December 31, 2020, have been extended to March 14, 2021. .
The bill was included in the Consolidated Appropriations Act , 2021, which was passed by Congress and signed into law by President Trump on December 27, 2020. In addition, people could extend their time on unemployment benefits by 24 weeks .
Once again, all unemployment benefits related to the pandemic ended on September 5, 2021, although some states did so earlier.
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Keep La County Dining Grant Program
To provide a boost to struggling local restaurants during the pandemic, $10.05 million from the CARES Act was used to create the Keep LA County Dining grant fund. These $30,000 grants were awarded to 335 small businesses and could be used for working capital only, including employee payroll and updated business practices to remain open and in line with public health requirements. Meet the owner of Natural World Goods in Redondo Beach who, thanks to the Keep LA County Dining program, was able to keep her doors open and her employees working.
Cobra Health Care Subsidies
One of the most significant new policy changes for employers in the ARPA is the inclusion of new COBRA health care premium subsidies for employees who have been laid off or terminated.
Employers are required to offer COBRA coverage to the majority of former employees for up to 18 months. Still, the former employee often has to pay the total cost of the coverage without the employer subsidizing the cost. The ARPA changes this so employers, plans or insurers must provide subsidized COBRA coverage to eligible individuals from April 1 through September 30, 2021.
While employers will incur higher upfront costs, the ARPA also created new advanceable and refundable tax credits to offset the costs. Employers are able to recover the cost by claiming a tax credit against standard payroll taxes.
Read more about COBRA subsidy changes here.
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Congress Reaches Deal On $900 Billion Coronavirus Relief Plan
Senator Mitch McConnell, the majority leader, said on Sunday evening the stimulus package would include direct payments for Americans.
WASHINGTON Congressional leaders on Sunday reached a hard-fought agreement on a $900 billion stimulus package that would send immediate aid to Americans and businesses to help them cope with the economic devastation of the pandemic and fund the distribution of vaccines.
The deal would deliver the first significant infusion of federal dollars into the economy since April, as negotiators broke through months of partisan gridlock that had scuttled earlier talks, leaving millions of Americans and businesses without federal help as the pandemic raged. While the plan is roughly half the size of the $2.2 trillion stimulus law enacted in March, it is one of the largest relief packages in modern history.
We can finally report what our nation has needed to hear for a very long time, Senator Mitch McConnell, Republican of Kentucky and the majority leader, said Sunday night. More help is on the way.
Both chambers approved the measure on Sunday night, and President Trump signed it shortly before midnight. Final votes on the spending package were expected as early as Monday to approve it and clear it for Mr. Trumps signature, but had yet to be scheduled.
It would also continue and expand benefits for gig workers and freelancers, and it would extend federal payments for people whose regular benefits have expired.
Money For Vaccine Distribution
- The bill includes $20 billion for the purchase of coronavirus vaccines that will make the vaccine available at no charge for anyone who needs it, according to a summary circulated by Scalises office. It also provides $8 billion for vaccine distribution and includes $20 billion to assist states with coronavirus testing.
- House Speaker Nancy Pelosi and Senate Minority Leader Charles E. Schumer said in a statement that billions were reserved specifically for combating the disparities facing communities of color, and to support our heroic health care workers and providers.
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Sba Economic Injury Disaster Loan Program
The EIDL program provides small businesses and nonprofits with low-interest loans of up to $2 million to help overcome other financial losses due to COVID-19.
Visit the Empire State Development website to learn more about these programs. The ESD website also has information about the statewide community network of Small Business Development Centers, Entrepreneurship Assistance Centers and Community Development Financial Institutions available to help guide businesses through the SBA loan application process.
What Is The Coronavirus Stimulus Package
The CARES Act was signed into law at the end of March. The Act contains several provisions that provide help for small businesses, individuals, big businesses, and more. Altogether, the economic stimulus package provides some $2 trillion in aid from the federal government.
Many of the programs described in the CARES Act are beginning to go into effect. Our guide will break down the provisions that matter the most to businesses like yours.
- : More parts of the CARES Act
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Work Opportunity Tax Credit
Extended through 2025, this income tax can be as much as $9,600 per new employee when the employee meets certain criteria, such as being released from prison, getting off welfare or returning to work after being unemployed for more than six months. Some employers I know are using this tax credit to fund hiring bonuses for new employees.
What Are Qualified Wages For The Employee Retention Credit
The definition of qualified wages depends on how many people you employ.
If you employed more than 100 people in 2019, qualified wages apply only to wages paid to employees who are not working because of one of the reasons above.
If you employed fewer than 100 people in 2019, qualified wages can apply to any of your employeesas long as your business meets the qualifications above.
You can get more details about the Employee Retention Credit on the IRS website.
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Employee Retention Tax Credit
A vital tax credit every business with fewer than 500 employees should know is the Employee Retention Tax Credit . The ERTC was first created in the CARES Act in March 2020, but it was not accessible for many businesses. Since that time, the ERTC has been modified and expanded by Congress twice so many more companies can use it.
Businesses that experienced a decline in gross receipts by more than 20% in any quarter of 2020 compared to the same quarter in 2019 are eligible. As of March 2021, this refundable tax credit can be worth up to $7,000 per employee per quarter. This means companies could receive a credit for $28,000 per employee during 2021, a substantial sum that can help companies recover to pre-pandemic revenue numbers.
Read more about the ERTC here.
How Much Do I Get
The size of these loans largely depends on what you ask for and what you need. Paycheck Protection Program loans are for up to $10 million or two and a half times a companys average monthly payroll costs. EIDLs are for up to $2 million, though the Small Business Administration has capped the initial disbursement at $15,000 per applicant for two months. This is due to the high volume of applications. The cap, however, is in addition to the $10,000 forgivable advance that is now limited to $1,000 per employee for companies with less than 10 employees
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