As the details of the Senate’s $2 trillion stimulus plan were revealed on Wednesday evening, one data point remains important to small law firms:
“Small businesses will get $367 billion to keep making payroll while workers have to stay home. Companies with 500 employees or less that keep paychecks steady could get up to $10 million each in forgivable small business loans. Federally guaranteed loans will provide eight weeks of assistance for qualifying employers who maintain payroll. Those who meet requirements would have costs such as utilities, mortgage interest and rent forgiven,” according to Axios.
Law firms, in many cases, are considered small businesses in this situation. At the time of writing this, at least 23 states have shut down “non-essential” businesses. While not all of the states include law firms as “non-essential,” the economic ripple is being felt across local communities across the country.
Federal, state, and local courts are experiencing closures, as well. While no blanket declarations have been stated, many courts are limiting personnel (and court business) at least through the first week of April.
How Law Firms Can Apply for Small Business Loans
While the federal government hammers out the final details of the Covid-19 stimulus package, lawyers will have to wait to see if, how, and when they can apply for a small business loan.
However, unless new offices are created for this specific situation, the U.S. Small Business Association will remain the arbiter and issuer of loans resulting from the coronavirus.
The SBA has a page of resources dedicated to the forthcoming stimulus. In it they detail who is eligible, how low interest loans work, and how to apply for the loans once they are available.
Additionally, the SBA explains how this stimulus falls under the umbrella of disaster relief, and answers questions that law firms are likely to have. Among the many facts they share:
- SBA’s Office of Disaster Assistance will coordinate with the state’s or territory’s Governor to submit the request for Economic Injury Disaster Loan assistance.
- Once a declaration is made, the information on the application process for Economic Injury Disaster Loan assistance will be made available to affected small businesses within the state.
- SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing.
- These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.
- SBA offers loans with long-term repayments in order to keep payments affordable, up to a maximum of 30 years. Terms are determined on a case-by-case basis, based upon each borrower’s ability to repay.
- For questions, please contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or e‑mail firstname.lastname@example.org.
Smokeball, also a small business, is here to support solo and small law firms as we travel through this disaster together. Please visit our resources page for more information on working from home, and reach out should our software be helpful in keeping your business running even as we work remotely.