Coronavirus lockdown orders have permeated the country creating dire consequences for employers and employees. Coronavirus has led to social distancing measures to protect communities, but the collateral damage on businesses, particularly small businesses, is proving to be devastating. Enter the banking industry. 

Coronavirus Lockdown Orders – Essential vs. Nonessential Businesses

California’s Governor Newsom issued executive coronavirus lockdown orders in March requiring residents to stay home unless they were needed to maintain “essential infrastructure.” That means a number of businesses have been shuttered, and employees left wondering how they will pay their bills. The businesses considered essential, to date, include grocery stores, pharmacies, banks, laundromats, law enforcement, fire and EMT, gas stations, and, of course, medical services. Some manufacturers and distributors, particularly those involved with the medical field, are also remaining in business. Likewise, employees who assist vulnerable populations in areas such as food and shelter operations may continue to work, as well as those dealing with child abuse and elderly care. Public works and communications employees are still going to work, and electricians, plumbers, and sanitation workers continue to support the community. Additionally, veterinary services are still available to the public. Finally, those working in mortuary, funeral, and cemetery services are deemed essential.  That leaves entertainment venues, salons, fitness centers and more with no way to make money. Those in transportation, and hospitality industries have limited employment. Indoor dining is prohibited, so restaurants can earn a marginal income through take-out and delivery orders.

State Options for Your Business 

The governor has worked with both national banks and state-chartered ones, along with credit unions, to create a grace period on loan payments in the wake of the COVID-19 outbreak prompted coronavirus lockdown orders. Additional programs centered around payment deferrals, fee waivers, interest rate adjustments, and various loan modifications are available to assist business owners who have been negatively impacted by the pandemic.

Federal Assistance

The federal government has enacted legislation to address financial assistance for small businesses that have been hit by the virus. Organizations with 500 or less on the payroll may obtain loans from the Small Business Administration to help with business expenditures. This may include the following:

• Payroll and compensation;
• Healthcare costs;
• Mortgage and other interest obligations;
• Rent and utilities.

These loans are provided with no collateral or personal guarantees, and costs associated with employee payroll will be forgiven up to $100,000. The remainder of the loan will carry no more than 4% interest. [Read more…]