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May 1, 2020

Coronavirus Relief Package – What Does It Mean For Small Business?

Sponsored Content provided by Robert Burrus - Dean , Cameron School of Business - UNC-Wilmington

This Insights article was contributed by Heather McWhorter, Regional Director of the Small Business & Technology Development Center (SBTDC)
The 890,000+ small businesses in North Carolina employ 1.6 million people and account for 60% of the private sector workforce and 45% of the Gross State Product. Like other employers, small businesses are concerned about the immediate and long-term business impacts of the COVID-19 pandemic and associated social distancing requirements.

In fact, a national study conducted between March 27-29 by America’s Small Business Development Center (ASBDC) and Thryv, Inc. showed that 79 percent of small businesses are "extremely concerned" about the current business environment. Looking out one year from now, roughly 60 percent of the survey respondents are concerned about long-term recovery and 3 percent of the respondents did not believe that their business would survive.
There are steps that small business owners can take to minimize long-term impacts. First, small business owners should know that COVID-19 and related social distancing requirements are out of their control. They should focus on what they have control over, such as having a good attitude and a sense of community, taking care of their business and employees, and having confidence that they built a good business.
Business owners should set aside time to analyze their business. Decisions about businesses need to be made with solid analysis and information. If customers are still in need of the product or service:

1) What level of sales will continue?
2) What is the minimum staff and materials needed to supply these customers?
3) Will these sales be enough to continue operations?
4) Is it worth turning on the lights to make these sales?
The answers to these questions will lead to more questions, such as:

1) Is enough cash (working capital) available to make this happen?
2) How long will this cash support some level of operations?
3) Can cash be created by selling equipment, vehicles, etc. not being used?
4) How much is the business owner personally willing to invest or put at risk to make this happen?
5) Is the business owner’s family in agreement on investing more family assets (cash) into the business?
Next, small business owners should consider disaster loans and other available recovery incentives. Most programs are first-come, first served so timing is critical. Finalized, verified programs currently available for NC small businesses are listed on the North Carolina Small Business and Technology Development Center (SBTDC) website at SBTDC is a business advisory resource for businesses with highly skilled professionals at UNC campuses. I am going to specifically address programs that resulted from the Coronavirus Aid, Relief, and Economic Security (CARES) Act in this article: SBA Economic Injury Disaster Loans (EIDL) and the Paycheck Protection Program (PPP). Note: specifics about these programs may change and are accurate as of April 6, 2020.
The CARES Act, signed into law on March 27, 2020, allocates $349 billion to help small businesses keep workers employed amid the current circumstances they are encountering related to Coronavirus. The CARES Act modifies the existing Economic Injury Disaster Loan (EIDL) program, provides funding for the Paycheck Protection Program, and provides immediate loan payment relief for current SBA 7(a) borrowers.
The U.S. Small Business Administration (SBA) EIDL is a standard, but modified, disaster recovery loan that was provided to small businesses after disasters such as Hurricane Florence. Up to $2 million can be provided by SBA at a 3.75% interest rate for small business. Loans can be made based on solely on credit score. Payments will be deferred for the first 12 months and will not be due until one year after original dispersement. Interest will not accrue during this time. Terms may be up to 30 years. Eligible entities have 500 or fewer employees and/or meet SBA size standards.
A $10,000 advance may be requested as part of the EIDL. The advance does not need to be repaid, even if the EIDL is denied. Uses of EIDL include payroll, paying sick employees, increased production costs due to supply chain disruption, and paying business obligations, including debt, rent, and mortgage payments. Advances are available to small businesses, sole proprietors, independent contractors, tribal businesses, as well as cooperatives and employee-owned businesses in operation on January 31, 2020.
Unlike the EIDL, which is a loan from the federal government, the new Paycheck Protection Program (PPP) is a private-public partnership with the lending community, including approved banks and credit unions. This program became available on Friday, April 3. The loan amount is based on recent payroll costs and compensation paid to individuals, including the self-employed, and may be up to $10 million at a 1% interest rate.

To calculate the loan amount to request, calculate the average monthly payroll costs and multiply by 2.5. Employees that make more than $100,000 must be excluded from this calculation. PPP loan payments will be deferred for a minimum of six and up to 12 months. The business must certify that the loan will be used to retain workers, maintain payroll, make mortgage or lease payments, and pay utilities.

Loans may be forgiven, up to an amount equaling eligible payroll, mortgage interest, rent, and utility costs, incurred during the 8-week period starting from loan origination. Non-payroll costs cannot make up more than 25% of the loan forgiveness amount; loan forgiveness is reduced by layoffs or pay reductions in excess of 25%. Compensation in excess of $100,000 a year to any individual, independent contractor or sole proprietor will not qualify for forgiveness.

Loan forgiveness is not treated as taxable income. Eligible entities are small businesses as defined by SBA size standards, generally up to 500 employees, but up to 1,500 employees depending on the sector as certain sectors are based on revenue. Additionally, sole proprietors, the self-employed, and independent contractors are eligible.
The UNCW SBTDC, which is affiliated with the UNCW Cameron School of Business, is “Open for Business” and our staff is available to work with you via video conferencing (Zoom), email, or by phone. We can provide assistance with continuity planning, disaster capital, and other resources to help your business manage during the current crisis. To request assistance, contact us at [email protected] or sign up as a client at Our assistance is free of charge and is confidential.
Reference: SBTDC Disaster website at
Robert T. Burrus, Jr., Ph.D., is the dean of the Cameron School of Business at the University of North Carolina Wilmington, named in June 2015. Burrus joined the UNCW faculty in 1998. Prior to his current position, Burrus was interim dean, associate dean of undergraduate studies and the chair of the department of economics and finance. Burrus earned a Ph.D. and a master’s degree in economics from the University of Virginia and a bachelor’s degree in mathematical economics from Wake Forest University. The Cameron School of Business has approximately 60 full-time faculty members and 20 administrative and staff members. The AACSB-accredited business school currently enrolls approximately 2,000 undergraduate students in three degree programs and 200 graduate students in four degree programs. The school also houses the prestigious Cameron Executive Network, a group of more than 200 retired and practicing executives that provide one-on-one mentoring for Cameron students. To learn more about the Cameron School of Business, please visit Questions and comments can be sent to [email protected]. 

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