How to Apply for Government Subsidies or Benefits for Your Business

Erin Salada
2 Apr 2020

As a small business owner, you want to treat your employees and customers well, and the novel coronavirus pandemic requires an informed approach to ethical management. This means following CDC guidelines to implement social distancing practices like urging sick or vulnerable employees to stay home even at cost to your business. The federal government is reinforcing these guidelines with the Families First Coronavirus Response (FFCR) Act, which mandates emergency paid sick leave for employees of small businesses who are quarantined, symptomatic or caring for someone due to COVID-19.

At the same time, you want your business to survive the outbreak. In order to reduce costs, many businesses resort to layoffs and furloughs, yet downsizing is not the only option. Read on to learn about the supportive measures provided for small businesses in the three recent federal stimulus packages.

Expanded Eligibility: Who Qualifies?

Businesses and nonprofit organizations with 500 or fewer employees typically qualify for loans through the Small Business Administration (SBA), and this is still true. In addition, the government’s most recent of the three packages—the Coronavirus Aid, Relief, and Economic Security (CARES) Act—has expanded eligibility for SBA loans to include sole proprietors and independent contractors. In other words, gig workers like freelancers or drivers for ride-share apps can also qualify. 

The Act also waives rules for Sector 72, otherwise known as Accommodation and Food Services, for Paycheck Protection Loans. As long as they do not employ more than 500 individuals at any given location, hotel and restaurant chains may qualify. While the waiver does not apply for SBA disaster assistance loans, the hospitality industry can keep up with costs through Paycheck Protection Loans, described below.

Paycheck Protection Loans

With the $349 billion provided by the CARES Act for the Paycheck Protection Program, small businesses can apply for loans to pay employees and prevent layoffs. Some features of these loans:

  • Can be up to $10 million 
  • Have a maximum interest rate of 4% 
  • Cover costs incurred between February 15 and June 30
  • Are eligible for up to 100% forgiveness after eight weeks if the employer maintains its workforce and applies the loan to eligible expenses

To apply for a Paycheck Protection Loan, contact your bank to see if they are one of 1,800 lenders approved by the SBA. If you need an approved lender, find one at the SBA website. Treasury Secretary Steven Mnuchin told FOX Business that these loans should be available by Friday, April 3.

Economic Injury Disaster Loans

The first stimulus package, or the Coronavirus Preparedness and Response Supplemental Appropriations Act, allows the SBA to apply $7 billion toward disaster assistance loans for businesses suffering economic harm due to the COVID-19 outbreak. These loans are low-interest—3.75% for small business and 2.75% for nonprofits—and have long-term repayments.

Like Paycheck Protection Loans, these disaster loans can be used to cover payroll costs, among other expenses. The CARES Act lets eligible businesses receive both as long as the loans are applied to different costs. Therefore, business owners should be prudent about their usage of both loan types.

To learn about eligibility and apply online for a disaster assistance loan, access the SBA application here.

Express Bridge Loans

These loans exist as part of a pilot program for small business owners who urgently need cash to cover revenue loss while awaiting disbursement on a disaster assistance loan. They can offer up to $25,000 quickly for eligible businesses.

To apply for an Express Bridge Loan, find a lender at your SBA District Office.  

Automatic Debt Relief for SBA Loans

If small businesses already have an SBA loan or take one out before September 27, 2020, the SBA will cover six months’ worth of principals and interest for these existing loans. No additional steps must be taken for this action. Small businesses may also have existing SBA loans for previous disasters. Payments for these loans will be deferred through December 31, 2020, and the SBA will similarly make this action automatic.

Tax Provisions

These tax reliefs are provided under the CARES and FFCR Acts. The former defers payment of Social Security payroll taxes until next year, and the latter offers refundable payroll tax credits intended to cover mandatory paid sick and FMLA leave. Small business employers receive 100% tax credit to the capped amount of benefits they must pay, and health insurance costs are covered.

Loan Application Assistance

With so many new forms of government assistance, some of them offering overlapping benefits, the best course of action may not be immediately clear to small business owners. If you are feeling overwhelmed or would like more detail about any of the above relief options, the SBA partners with local entities to counsel small businesses. These include SCORE offices, Women’s Business Centers and others. Use the SBA’s Local Assistance Directory to find all types of local resources.For an overview of federal aid provided by all three stimulus packages, visit this guide prepared by the U.S. Chamber of Commerce. For the most up-to-date resources compiled by the Small Business Administration, visit their website here. The information found at these sites can help answer questions about your specific circumstances.

Erin Salada

Erin Salada is a writer and educator based in Austin, TX. She received her MFA in Creative Writing from Texas State University, where she was a Rose Fellow. Visit her at or on Twitter @saladacious.