The COVID-19 pandemic creates uncertainty for both Arizona families and for all small businesses trying to stay afloat. Luckily, the Arizona and federal governments have been making an effort to provide protection and recovery program options for small businesses, entrepreneurs and workers.
On April 6, 2020, Gov. Doug Ducey issued an executive order stopping all evictions in Arizona for any small businesses and nonprofit organizations that are unable to pay rent due to financial strains caused by the Coronavirus pandemic. The order for halting commercial evictions is in effect until May 31, 2020.
The legislation is also encouraging all commercial landlords to defer rental payments, as well as waiving all late fees and interest resulting from late payments for small business tenants. This does not mean that businesses don’t need to pay rent. To the contrary, the order only prevents lockouts and evictions during this period of mass business shutdowns and stay-at-home orders.
But by pausing evictions, it is a great help to small business owners. Additionally, more economic relief programs have been put in place for aid, but there is limited time for businesses to gain these benefits from the Federal Coronavirus Aid, Relief and Economic Security Act, more commonly known as the CARES Act. This act put programs and initiatives such as the Emergency Economic Injury Grant, Small Businesses Debt Relief Program, and the popular Paycheck Protection Program.
The Paycheck Protection Program, designed by the Small Business Administration, put through a first round $349 billion package in aid for small businesses to pay their employees with loans. Now a second round for an additional $310 billion is being provided to help those businesses that got shut out. While the first round ran out rapidly — less than two weeks — the second round gives those businesses that were unable to get approval another chance.
The loans ensure eight weeks of payroll and additional costs such as fixed debts, accounts utilized by the business, and additional bills or expenses that cannot be paid due to the repercussions of the pandemic. The loans are 100% federally guaranteed with an amount up to 2.5 times the monthly payroll average from the prior year to help cover the additional costs. The amount that is used for a permitted purpose is forgiven – turning that money into a federal grant to help the business stay afloat.
Businesses that are approved for this loan must have 500 or fewer employees (with highly publicized exceptions for restaurant and hotel chains). Additionally, organizations must show proof that the business in question has been negatively impacted by the virus by certifying on the application that current economic uncertainty makes the loan request necessary.
Eligibility of the loan also includes business in the categories of accommodation service, food service, tribal businesses, independently owned franchises, and self-employed workers such as independent contractors.
If you run into any legal trouble or have questions about the relief programs and its applications to your small business, it’s important to contact your attorney.
Written by: Jonathan Frutkin, Founder Radix Law
Jonathan Frutkin is the founder and principal of Radix Law. The firm focuses on providing general counsel, including legal advice on capital formation, mergers and acquisitions, litigation strategy and intellectual property. You can find more information at radixlaw.com.