Since the start of the COVID crisis, The New Hampshire Department of Business and Economic Affairs has been active in its attempts to alleviate some of the financial pressures being experienced by small businesses across New Hampshire. “We know that the Covid-19 pandemic is having detrimental effects on New Hampshire businesses,” BEA Commissioner Taylor Caswell said at a news conference in March. “The BEA mission is to provide them with the financial and technical resources they need to ride out these uncertain times and be ready to continue operations.”
In addition to launching a website providing resources for affected businesses, the BEA was quick to embrace the two new SBA administered loans that have been created as a direct response to the crisis. Small business owners suffering a loss of revenue as a result of the crisis are now invited to apply for one (or both) of the loans to help meet payroll and other crucial costs. Eligibility is limited, as are the funds – both programs have already been exhausted and replenished, and with a first-come, first-served approach to applications, it’s advisable to get your application in sooner than later. If the COVID crisis is taking its toll on your cash flow, here’s how to apply for a small business loan in New Hampshire.
What is the Paycheck Protection Program?
The Paycheck Protection Program (PPP) has been created specifically for small businesses struggling to keep on top of payroll and operating costs. If you meet the eligibility requirements, you stand to benefit from a low-interest loan that will be fully forgiven if at least 75% of the funds are used to retain the current payroll for at least 8 weeks after the loan origination date. The remainder of the funds are to be used against other crucial costs such as business rent, business mortgage interest payments on real or personal property, or business utility payments.
Other terms to note include 2-year repayment terms (the first payment can be deferred by 6 months, but bear in mind the principle will begin accruing interest immediately); no fees for early re-payment; and no loan administration fees. Loans are capped at $10 million, with the maximum that can be borrowed determined by your usual payroll expenses. To see how much you could get, multiply how much you spent on payroll between Feb 15, 2019, and Jun 30, 2019, and multiply the total by 2.5. if you weren’t in operation during that time, use your payroll costs from Jan 1, 2020, and Feb 29, 2020, instead.
What Are the Eligibility Requirements of the Paycheck Protection Program?
Eligibility for the PPP is strictly limited to small businesses that have been in operation since Jan 2020 and who can demonstrate that their revenue has been substantially and adversely affected by COVID -19. Further, eligibility is limited to:
- Companies that employ fewer than 500 workers. Companies that employ over 500 may still be classed as a ‘small business’ under certain circumstances – check the SBA Size Standards to see if your business qualifies
- Tribal businesses
- Private non-profits
- 501 Veteran organizations
- Independently owned franchises
- Self-employed workers, independent contractors, gig workers, and sole proprietors
- In addition to the above, acceptance requires that:
- The company was in operation prior to 1st Feb 2020
- The company is organized for profit and operates primarily from the US (or, alternatively contributes significantly to the US economy)
How Can I Apply for the Paycheck Protection Program in New Hampshire?
Although the SBA administers the Paycheck Protection Program, you’ll need to apply directly via an existing SBA 7(a) lender, a federally insured depository institution, a federally insured credit union, or a Farm Credit System institution. For a full list of lenders in New Hampshire, visit sba.gov. A word of advice before you chose your lender. Some small businesses have reported significant delays in the processing of their applications, particularly in instances where the loan amount is relatively minor. As funds for the PPP are limited, any kind of unnecessary delays from the lender are best avoided. Be sure to ask for details about how many applications they’ve received, how many they’ve approved, and how many they’ve paid out on. If the paid amount is in the hundreds and the received amount is in the thousands, it might be worth considering another lender. Once you’ve finalized your choice of lender, download and complete the PPP borrower application form from the SBA website and submit this, along with your payroll records, to the lender.
What is the Economic Injury Disaster Loan?
Like the PPP, the Economic Injury Disaster Loan (EIDL) is intended to provide relief to small businesses suffering as a result of the COVID-19 crisis. Loans are capped at a smaller amount than the PPP ($2 million with the EIDL vs $10 million with the PPP), but businesses aren’t limited to applying for just the one: if you’ve already taken a PPP for assistance with payroll, you can also apply for an EIDL towards operating costs. Providing you don’t use the different loans for the same purpose, the SBA doesn’t look negatively on dual applications.
Unlike the PPP, the EIDL doesn’t offer full loan forgiveness. It does, however, offer the option to request a forgivable advance of up to $1000 per covered employee, up to a max of $10,000. Unlike the rest of the loan, the advance doesn’t have to be paid back, and will be paid straight into your bank account within three days of your loan being accepted. The remainder of the loan is repayable over 30 years at an interest rate of 3.75%. If you borrow $25,000 or less, no collateral is needed. Equally, no personal guarantee is needed on loans of $200,000 or less.
What are the Eligibility Requirements of the Economic Injury Disaster Loan?
The EIDL shares the same eligibility criteria as the PPP, namely: the business must have experienced adverse financial impact as a result of COVID, employ less than 500 employees, be organized for profit, and operate primarily from the US. Tribal businesses, private non-profits, 501 Veteran organizations, independently owned franchises, self-employed workers, independent contractors, gig workers, and sole proprietors are also invited to apply.
How Can I Apply for the Economic Injury Disaster Loan in New Hampshire?
To apply for the EIDL in New Hampshire, you should make your application directly through the SBA website. The application is streamlined and shouldn’t take you more than around 2 hours to complete. Be sure to have all your business information and payroll records to hand before you start, as you will be asked to confirm details of both. If you need any advice on how to complete the application, the SBA website provides a list of local resources that can help.